I need to understand the federal income tax liability
for a personal
-injury settlement. The settlement is the result of a work-related, motor vehicle accident that happened while I was on a business trip overseas.
As as result of my injuries, I received temporary-total workers comp disability
payments, as well as social security disability and medicare
. Comp disability stopped at the time of the settlement.
The settlement breaks down as follows: 10% for physical pain & suffering. 30% for loss of past & future earnings. 60% for cost of future medical
care, i.e. surgeries, palliative care and prescriptions.
All workers comp disability and medical costs, as well as foreign
medical costs and medicare expenses were repaid from the settlement total.
Legal fees were actual cost, not based on contingency, and included all costs incurred by foreign attorneys as well as the principal and interest
on several legal-aid fund loans taken on my behalf. Legal fees amount to approximately 25% of the settlement total.
Per custom, there was a subsequent, separate negotiation for recovery of the cost of legal fees. The defendant ended up reimbursing me for about 85% of my foreign legal costs.
Any information about liabilities
for this type of settlement will be greatly appreciated.