If you get money from a lawsuit, from a car accident you had and you used it to pay off your house, with out paying taxes on that money...are you in trouble?
2007-05-29 15:14:25 · 4 answers · asked by The Brown Bomber 2 in Business & Finance ➔ Taxes ➔ United States
depends what the law suit is for it may not have to be taxed.
2007-05-29 15:47:14 · answer #1 · answered by ainger452 3 · 0⤊ 0⤋
Yep, probably are. Save the money you would have spent on your house for the next few months for that tax bill. I would contact a tax accountant (not HR Block, but a real accountant) to see what needs to be done. Many jurisdictions will penalize you if you owe too much money at the end of the year under the assumption that you should have known to pay the taxes right away. The penalties plus interest on back taxes are always a lot worse for the taxpayer than the interest on payment plans that are negotiated with taxing authorities from the beginning, so it is usually best to avoid the penalties and offer to pay up as soon as possible if you don't have the cash. Avoiding the tax issue is how 3,500 tax bills become 35,000 tax bills.
2007-05-29 23:32:50 · answer #2 · answered by Seinen Wakichou 5 · 0⤊ 0⤋
It depends on what the money was for. If it was to compensate you for monetary losses for injuries (like medical bills) or damages to your car, then it's not a problem. If it was compensation for something like lost wages, or punitive damages, then it's taxable, and when the IRS catches up to you, you'll owe the tax, plus penalties and interest.
2007-05-30 01:31:08 · answer #3 · answered by Judy 7 · 1⤊ 0⤋
Not until the IRS wants their money... THEN you are in BIG trouble.
2007-05-29 22:22:51 · answer #4 · answered by Anonymous · 0⤊ 0⤋