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Do you have to pay taxes on money received from auto insurance claims?
7 Apr 2010Related Post :
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5 Responses to Do you have to pay taxes on money received from auto insurance claims?
dual_reality2
April 7th, 2010 at 5:02 pm
no–it’s a loss.
Mathew
April 7th, 2010 at 5:32 pm
Not if the funds are meant to bring you whole, such as just recovering the cost of the damages.
Maverick
April 7th, 2010 at 5:37 pm
No you don’t have to pay taxes on auto insurance claim to fix your auto. But lets hope a politician isn’t reading this because we might have to do that in future. jk
ninasgramma
April 7th, 2010 at 6:28 pm
It depends on what the money is for and how much it is. If it is for physical injury then it is tax-free.
If your car was used only for personal use, and insurance paid you for damages to your car, then the money will be tax-free unless the insurance paid you more than the car was worth. This is very unlikely as the insurance company is going to know what your car is worth and pay you accordingly.
If your car was used 100% for business, and you depreciated your car (either through acutal expenses or mileage), then the insurance payment in excess of the adjusted basis of your car is taxable.
If your car was used less than 100% for business then the above applies to the percentage of business use.
Judy
April 7th, 2010 at 6:33 pm
Not usually. If they’re to compensate you for expenses like damage to your vehicle or physical injuries, no. If they’re punitive damages, then they’re most likely taxable.