Compensation is often seen in the wrong light and it is important that it is understood as the necessary legal tool which it is. In order to help do this, we are going to take a look here at the facts about compensation, why it exists, how it helps and other factors in how compensation is awarded. Filing a claim after a personal injury is important, and compensation is the ultimate goal, along with proving liability. Working with great law firms like injury attorneys Philips Law Group is the best way to go about winning your case, and here is what you need to know about the compensation which you may be awarded.
What is Compensation For?
Strictly speaking the role of compensation is to try and put the injured party back to the financial situation which they were in before the accident. This is a relatively rudimentary way of looking at it, because there will also be future considerations to make for those who have life altering injuries. In basic terms however, this is what compensation is for.
How Is Compensation Calculated?
When compensation is calculated your legal team will look at the location of your injuries and their severity, which will help them to value your claim. Additionally however they will look into other impacts which the injury has had, both emotionally and mentally, as well as the pain and suffering which you have gone through.
Does Compensation Increase With Inflation?
This is a hot topic in many law offices, but the simple answer is that yes, the government does look at the rate of inflation with regards to compensation. This is routinely reviewed and changes are made which law firms are made aware of.
Are You Taxed On Compensation?
There are som eventualities in which you will be taxed on the compensation which you are awarded, because it is considered as income. With this being said however in most cases you will not be taxed because of the fact that this money is recompensing you for what you have already spent. In the eyes of the IRS, you have already paid tax on that expenditure therefore you will not be taxed again.
What Can You Spend Compensation On?
Although compensation is awarded based on the costs which you have had to pay out, there are no restrictions on how you can spend it. Once you have received the compensation this money is yours to do whatever you want. Naturally if you need care in the future because of the injuries then your money is best spent on that, but nobody will be checking that this is how you have spent it.
When you first agree to work with a legal team you will agree on a percentage which you will pay them, and this will be a percentage of your compensation. This money will be taken out of your compensation before it is given to you, in order to cover those legal fees.
Any more questions which you may have, don’t hesitate to ask away in the comments section below.