Car insurance payout after wreck - Income?

#3 04-04-2006, 07:59 AM

Seth Breidbart wrote:
- quote -

> Donna <donna_bjorn[at]hotmail.com> wrote:

> > My car was totaled in an accident. The other driver's
> > insurance company sent me a check for several thousand
> > dollars, and I used that money to buy a used car to replace
> > my totaled car.
> > > Do I declare the money from the insurance company as
> > "income" on my federal income tax form 1040A? If not, do I
> > declare it as income on a different form?

> For tax purposes, you sold your car for the amount the
> insurance company paid you. If it's your personal car and
> that amount was less than you paid for it, there's nothing
> to report (you sold it at a non-deductible loss).

Thank you. I did use it for business, however. I plan to use
the Standard Mileage Rate of 37.5 cents per mile for tax
year 2005 on my 2005 return, and deducted about 65% of the
mileage for that year.

The amount the insurance company paid me was less than I
paid for the car originally, and also slightly less than
what the car was worth the moment before it was totaled.

So, still "not income" and so nothing to declare. Is that
correct?

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

#2 04-02-2006, 03:06 PM

Donna <donna_bjorn[at]hotmail.com> wrote:

- quote -

> My car was totaled in an accident. The other driver's
> insurance company sent me a check for several thousand
> dollars, and I used that money to buy a used car to replace
> my totaled car.
> Do I declare the money from the insurance company as
> "income" on my federal income tax form 1040A? If not, do I
> declare it as income on a different form?

For tax purposes, you sold your car for the amount the
insurance company paid you. If it's your personal car and
that amount was less than you paid for it, there's nothing
to report (you sold it at a non-deductible loss).

Seth

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

#1 04-02-2006, 02:47 PM

"Donna" <donna_bjorn[at]hotmail.com> wrote:

- quote -

> My car was totaled in an accident. The other driver's
> insurance company sent me a check for several thousand
> dollars, and I used that money to buy a used car to replace
> my totaled car.
> Do I declare the money from the insurance company as
> "income" on my federal income tax form 1040A? If not, do I
> declare it as income on a different form?

It's probably not taxable, assuming the car wasn't used for
business. See Publication 525.

--
Phil Marti
Clarksburg, MD

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

04-02-2006, 02:47 PM

donna_bjorn[at]hotmail.com (Donna) posted:

- quote -

> My car was totaled in an accident. The other
> driver's insurance company sent me a check
> for several thousand dollars, and I used that
> money to buy a used car to replace my totaled
> car.
> Do I declare the money from the insurance
> company as "income" on my federal income
> tax form 1040A? If not, do I declare it as
> income on a different form?

Any insurance reimbursement for a loss is not considered
income. Nothing to report.

Bill

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

#-1 04-02-2006, 02:06 AM

My car was totaled in an accident. The other driver's
insurance company sent me a check for several thousand
dollars, and I used that money to buy a used car to replace
my totaled car.

Do I declare the money from the insurance company as
"income" on my federal income tax form 1040A? If not, do I
declare it as income on a different form?

Thank you for your help!

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

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