If you have been injured at your job and have worked with an attorney to secure a fair settlement offer, you may be excited at the prospect of putting an end to your case and to receive some financial compensation for your injuries. And while your lawyer will probably make you aware of this during the process, know that you will not be keeping the entire settlement amount. If you earn a $500,000 award, don’t expect to receive a $500,000 check in the mail.
But how much will you take home, and who may get a cut of your award? We explain your take home amount after a work injury settlement in today’s blog.
Who Gets A Cut Of My Workers’ Compensation Award?
Although you may be a little bummed that you won’t get to keep the entire amount of your award, there’s plenty of good news in this blog as it pertains to your take home amount. So let’s start with the obligations and finish on a positive note.
The biggest obligation you’ll have after securing a workers’ compensation award is settling up with your lawyer. Workers’ compensation lawyers do not require up front fees or large retainers. Instead, they work on what’s known as a contingent basis. This means that they’ll receive 20 percent of whatever award is granted to the client. You’re still taking home 80 percent of the award amount, and this also means that your lawyer has a vested interest in securing you the largest award possible. The more money they get you, the more they take home.
Oftentimes a lawyer more than pays for themselves because they can help a client get more than they would have secured on their own. You may be able to keep 100 percent of a $25,000 award that you secured, but if a lawyer would have helped you earn a $50,000 payday, paying them $10,000 for their work is more than worth it. Even though you have to pay a cut to your lawyer, it’s usually well worth it for the injured worker.
Some of your workers’ compensation settlement may be earmarked for your insurance company as well, if they paid some of your medical expenses. For example, if you suffered a work injury and incurred $5,000 worth of medical expenses that was paid for by your insurance, your injury settlement may include funds to pay back your insurance company, as your employer’s workers’ compensation provider is responsible for covering these expenses. If you paid these bills out of your own pocket, you’ll get to keep compensation that is ordered to cover these bills, but if your insurance company covered your bills, they’ll recoup what they spent. It may come out of your award, but it was never really yours anyways.
A final cut you may have to pay is for unpaid child support obligations. Minnesota has declared that child support arrears can be withheld from a workers’ compensation award if the injured party has earned more than $500. If you earn a $50,000 award and owe $600 in child support, that money will be withheld from your settlement and paid to the appropriate party.
Now, here’s the good news. Unlike a financial windfall like the lottery, you will typically not have to pay any taxes on your award. You won’t need to set aside a large portion of your award to pay off a big tax bill at the end of the year. Your lawyer can ensure this is correct, but you should not expect to have to pay any taxes on your award.
So while you won’t take every single cent home, you can still earn a huge award and have the financial security you need after a work injury by connecting with a lawyer who knows how to maximize your award. In the greater Twin Cities area, you’ll find that in Dean Margolis and the team at Margolis Law Firm. For more information, or for help with an injury case, give his team a call today at (952) 230-2700.
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