Ayers, Whitlow & Dressler

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Man dragged from United flight to receive tax-free compensation

The images of a dazed and disheveled man being dragged off of a United Airlines flight will likely stay with us for quite some time. The airline came to a settlement with Dr. David Dao, the passenger who was forcibly removed to make room for United personnel.

As expected, the terms of the deal were confidential, and one can only guess how much Dr. Dao will be compensated for his troubles. But one thing is certain, his payment will be tax free. The IRS allows for physical injuries to be compensated without taxation. Dr. Dao suffered a concussion, a broken nose and lost two teeth during his scuffle with police officers. 

The questions surrounding the taxation of the United settlement are important for those injured in distracted driving accidents, drunk driving accidents and truck accidents. People hurt in these crashes often sustain extensive injuries, and their lives are changed in the blink of an eye. Moreover, they may to endure months (and sometimes years) of rehabilitation and may not be able to work during their recovery.

As such, the financial compensation stemming from auto accident injuries must be established in a way that will be fair to the injured party.

So while compensation for physical injuries is considered tax free, the same cannot be said for emotional injuries (i.e. emotional distress). Compensation for those injuries may be taxed according to a person’s income level.

If you have additional questions about personal injury compensation, or how much your case may be worth, an experienced attorney can advise you.

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