Wednesday, August 3, 2011

Auto Insurance Payments and Claim Receipts tax issues

while getting Claim settlement receipts from Auto Insurance companies is whether what amount they are receiving is taxable or non taxable. Auto insurance claim settlement payments are non taxable. You can get settlements from insurance provider in forms of,1) Repairing or replacing your car, 2) Medical expenses if you need medical treatment or rehabilitation treatment due to a car-related injury, 3) Replacement services (housekeeping, child care, elderly care). This is for things you used to do but cannot do now due to your injury.
Car Insurance payments are not taxable because they are compensation for your loss and intended to retrieve back your previous financial position not as a addition in your financial standings. Insurance claim settlement payments are not income so there is no tax payment on them. These claims settlements are generally not taxable, you should report what you receive to the IRS. You just need to report your claims payment as income.

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