After the Deepwater Horizon oil spill in 2010, the environment and the economy of the Gulf Coast were in ruins. Fortunately, a claims process got set up that enabled people whose lives were impacted by the oil spill to seek compensation for the damages that they experienced. People filed claims for economic losses sustained by their businesses, property damage from the oil spill, and illnesses and injuries that they suffered as the result of the oil spill. Eventually, BP reached a settlement with those who had brought claims, and the settlement monies got distributed to the people who had filed the claims.
Unfortunately, the story does not end there. Claimants did not merely receive funds that they could use to help themselves recover from the unique damages that each of them suffered as the result of the oil spill. Many claimants found that they were expected to send part of their settlement money to the IRS. Some settlement monies, whether from an oil spill settlement, or some other type of claim for damages, are indeed taxable. Not all settlement monies are taxable, in fact, most personal injury settlements and verdicts are exempt from state and federal taxes.
Some people who were pursuing claims realized in advance that their settlement monies would get taxed, so they planned and took actions that resulted in them paying the least amount of tax possible on their settlement funds, including taking action to ensure that their settlement money did not land them in a higher tax bracket. Unfortunately, many people did not know that they would get taxed or that planning ahead was the only way to avoid negative tax consequences associated with settlement proceeds.
If you have not yet settled a claim for damages, look into whether or not the proceeds of your settlement will get taxed. If you find that the settlement that you are pursuing is taxable, avoid getting placed in a higher tax bracket by choosing to get your funds paid to you over time instead of in one, large lump sum. Many people choose the lump sum option because they want all of their money and they want it now, but because of taxes, those who choose that option lose a lot of that money to taxes.
Spreading out the tax liability for your settlement money over time is a perfectly acceptable method of dealing with the taxes on your settlement money. Individuals who are pursuing a settlement who want to use that method can set up their deferred compensation plan with a settlement planner so that the settlement plan meets all applicable state and federal requirements. Just as pursuing settlement of a claim produces better results when you have an attorney represent you than if you do it on your own, receiving settlement funds through deferred compensation is not something that it is advisable to attempt without the aid of an experienced professional.
Barrett Law PLLC: Supporting BP Oil Spill Plaintiffs
Economic and environmental health is beginning to return to the Gulf Coast region thanks in part to proceeds from the oil spill settlement. However, many plaintiffs are dismayed to learn that there could be tax consequences of their settlements. If you are in the process of settling your claim, make sure you get all the facts about taxation as it applies to your settlement. To learn more about the BP oil spill litigation, call the Mississippi BP Oil Spill Attorneys at Barrett Law PLLC at 1 (800) 707-9577, to arrange an initial consultation.
