I lost my home in Hurricane Wilma and recieved an insurance check in 2006. Do I have to claim that amount on my taxes as additional income?
2007-03-10 16:15:45 · 5 answers · asked by Rachelle 2 in Business & Finance ➔ Taxes ➔ United States
no, because what you recieved was to replace what you already got with already taxed income.
2007-03-10 16:28:05 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Since you lost your home, you probably claimed a casualty loss in 2005. If you deducted your loss in 2005, you must include the reimbursement in your income for 2006 up to the amount of the deduction you took in 2005.
If your insurance check is more than your loss, you have a taxable gain on the difference. This gain can be deferred if you purchased another home.
If you did not purchase another home, you may be able to exclude the gain by using the exclusion on the sale of a principal residence, assuming you lived in the home for two of the preceding five years.
If you did not deduct a casualty loss in 2005, amend your return and include the 2006 insurance reimbursement on Form 4684 for 2005, and figure your gain or loss in 2005.
Seek a tax preparer in your area with experience in these losses. Since Hurricane Wilma was a Presidential Disaster, there are other tax considerations I have left out here that could benefit you.
2007-03-11 00:04:29 · answer #2 · answered by ninasgramma 7 · 3⤊ 0⤋
Usually insurance is not taxable income.
Insurance is a service that you pay for, and you're now (finally) receiving the service. As such, it's a non-taxable event.
However, what you need to do is figure out if you have a gain from the payment. I'm assuming your home was a total loss and all your personal property inside as well? Find the total market value of everything you lost and compare to the total of all insurance payments you received.
If the insurance payments were larger, you have a gain. If your insurance didn't cover all costs, you don't have to worry about it.
Edit:
Oh darn, there's one more thing...did you claim any of the losses on schedual a before you received the payment? Let me know. (You can e-mail me or just post another question with the details. There are several here who can answer tough questions.)
2007-03-10 16:18:26 · answer #3 · answered by Anonymous · 0⤊ 0⤋
nope, i consulted an accountant for the very same question. state tax might be a different case. but i know for sure that its federal tax exempt.
2007-03-10 16:20:29 · answer #4 · answered by gr 5 · 1⤊ 2⤋
ONLY IF you deducted the premium. If you didn't then NO.
2007-03-10 16:23:52 · answer #5 · answered by Anonymous · 0⤊ 1⤋