The legal system asks the person responsible for an accident to compensate any injured victims, so that their life could get back to the place it was in, when the accident took place. The reimbursement money is called compensatory damages.
Types of compensation
There are 2 types of compensatory damages: special and general:
Special damages compensate an injured victim for any monetary losses. Those would come from the payment of medical bills, both now and in the future. Other losses would come from the absence of a salary, in addition to any household expenses and any cancelled or altered plans.
General damages compensate for pain and suffering and mental anguish. If any victim has died, then the responsible party must pay the costs for that wrongful death. That means covering the costs of funeral expenses, burial expenses, medical care before the passing of the unfortunate victim, loss of consortium or companionship, and loss of support, such as financial help.
Some defendants become responsible for paying punitive damages.
The legal system has introduced such damages as a way to punish a defendant that has demonstrated an egregious level of negligence. That means showing a readiness to ignore the requirement for a suitable display of care towards others.
Unlike the payment of a fine, the payment of punitive damages does not provide the government with direct access to an increased source of revenue. Instead, it creates a way for the compensated plaintiff to obtain an added amount of money.
Still, not all plaintiffs welcome the opportunity to acquire those added funds. Each dollar that a plaintiff obtains in the form of punitive damages must be reported to IRS. In other words, plaintiffs can be taxed for the money that is meat to punish the defendant.
By hiring a Personal Injury Lawyer in Huntsville, a plaintiff can seek to reduce or eliminate the size of a punitive damage award. The lawyer might seek to obtain more money as compensation for future medical costs, or for the loss of future earning opportunities. Lawyers know how to negotiate with judges.
The legal system seeks to be fair to the victims of an accident. It wants to help them return to the place that they were before the accident. If lawyer can convince a judge that a specific reimbursement would achieve that, then the same judge agrees to arrange for the addition of that added bit of compensation.
Where does a judge get the money for that added compensation? It comes from the punitive damages. Hence, the degree to which a plaintiff might be taxed for damages depends on the extent to which the defendant might get punished financially. Hence, less money for the plaintiff could mean fewer taxes for the same plaintiff.