What is the tax liability for a financial settlement received from an auto insurance company?
Thank you for your prompt responses. I should have added more details so you’ll know what I mean. I was rear-ended on the freeway in Chicago last Spring ‘08. The driver of the other car immediately assumed responsiblity and his (out of state) insurance company issued a check for $3,500 to be released of futher involvement (it was very minor; only bumper damage). On the stub attached to the check the description only reads "Bodily Injury Payment-Auto"…….I was up late completing my taxes and remembered this incident and didn;t want it to haunt me later. I searched the web fir answers (even the IRS) and the answer are the same as yours (basically)………..thanks.
If it is a private car there is no liability. If it is a business car & a write off , you treat it as sold for the amount of the claim. In the UK there will be a balancing allowance or charge on your capital allowances.[less a deduction for the private use percentage.]
July 17th, 2010 at 8:15 pm
Wow I hope nothing I never even considered that, I would say none, since you paid money to purchase the car and the taxes on that money already. You are simply getting some of the money back, and they already had the taxes already. If you spend the money on a car again, they again get taxes, so now your double taxed for the same money. I dont remember them explaining my settlement as this amount of it is for taxes I paid.
References :
July 17th, 2010 at 8:30 pm
If it is a private car there is no liability. If it is a business car & a write off , you treat it as sold for the amount of the claim. In the UK there will be a balancing allowance or charge on your capital allowances.[less a deduction for the private use percentage.]
References :
July 17th, 2010 at 8:46 pm
Maybe You should try to google it first ,nonetheless, if you prefer some direct resource ,here http://www.InsuranceFreeTip.info/insurance-for-free.htm might be helpful.
References :