Worker Comp questions

Posted by rck9876 on February 21, 2008, 3:05 pm

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My wife was in an auto accident a couple of years ago while on the
job. The fault was on the driver of the other vehicle. After the
initial surgeries on her knees/legs and two years of physical
therapy,
she has not yet recovered and returned to work because her company
refuses to acknowledge the injurries on her head and neck. She has
headache/migraine regularly and also has periodic loss of vision on
one eye. She has not re-gained the full range of motion on her knees
and legs (she still suffers from knee and leg pains, swollen knees
after walking for no more than 10 minutes). Now her company is
pushing for a settlement (her W/C attorney recomends her to settle as
well, probably because he wants to close the case). In addition, the
insurance company of the other driver indicated they want to settle
the case. Both the WC settlement and auto injury settlement may
happen in 2008.

I know that her monthly workers comp income is not taxable. What
about the lump sum workers comp settlement? Is it taxable? If it is
taxable, should she ask her company to split the settlement between
her and the W/C attorney that represents her, so she would only
receive the net proceed from the settlement and pay only the taxes on
the net amount that she would receive?

Also, is the lawsuit settlement taxable? She has a lawyer (different
from the W/C lawyer) for the lawsuit. If it is taxable, should she
also ask the insurance company to split the settlement between her
and
the attorney, so she would only receive the net proceed from the
settlement and pay taxes only on the net amount that she would
receive?

We also appreciate any other suggestions/input regarding the W/C case
and
the auto lawsuit case themselves. There may be some pitfalls
relating
to the procedures and/or timing that we don't know about.

Thank you for your help.

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