i had a car accident and my insurance paid off my totaled car($17k). i owe the car loan $22k and i paid $5000 from my pocket. for the health expenses the other car's insurance pay us $30k and the lawyer get $10k. i paid to hospital expenses at the begining $4k from my pocket and $6k goes to doctor expenses that did everything on lien and i get $14k at the end of case ( included $4k that i paid at the begining) . now for tax return what i need to do. do i need to file that? if yes then how or do i need to fill out what kind of forms?
2006-09-01 09:27:00 · 5 answers · asked by merih 1 in Business & Finance ➔ Taxes ➔ United States
I would consult a tax consultant, but my guess is that since it is a replacement for assets you already had, not assets gained that you wouldn't have to claim it. Also, if you paid hospital expenses out of your pocket, you may actually be able to deduct that.
2006-09-01 09:44:41 · answer #1 · answered by Heather B 4 · 0⤊ 0⤋
Consult a tax accountant. What I remember from our accident a couple of years ago (not quite the same - ours was a hit and run) so only our insurance is.
l. Money received from your insurance company is tax free because you paid the premium.
The hospital bill that was paid out of your pocket and not reimbursed is tax deductible. If believe that you have to pay taxes on the money received (or part of the money received from the lawsuit.
You should have receipts for everything from money received from the auto insurance companies, receipts for hospital bills and a receipt from your lawyer for monies paid.
One of the things that your accountant will tell you is if you need to file/pay a quarterly tax form. If tax is due the government always wants their money. If it is due and not paid, they can and do charge interest and fines.
2006-09-01 09:40:06 · answer #2 · answered by kny390 6 · 0⤊ 0⤋
Check with a tax professional. My understanding is this:The $17k for the car reimburses for the lost value and is not taxable. The medical expenses are also no taxable. Any 'loss of earnings' compensation would be taxable because the earnings would be. I don't know about the lawyers fees.
2006-09-01 14:55:24 · answer #3 · answered by STEVEN F 7 · 0⤊ 0⤋
The portions of the settlement that "make you whole" are not taxablem because it is to represent replacing the things you lost, which whoch you have already paid tax on, and to paid your medical bills, which are not taxable. Anything above and beyond those amounts, like pain and suffering or punitive damages, are subject to tax.
2006-09-01 18:45:47 · answer #4 · answered by misslabeled 7 · 0⤊ 0⤋
Yes, its an income that you will need to pay taxes on. Usually around 40 percent.
2006-09-01 09:32:57 · answer #5 · answered by Whiskeytangofoxtrot 4 · 0⤊ 1⤋