for a car accident where he was hit by a drunk driver in December of 2003 (it took that long to get settled). When this tax season comes around and we file our taxes are we going to have to pay tax on it? Or how does that work? I don't want any surprises when it comes around. Thanks in advance.
2007-09-20 02:20:19 · 6 answers · asked by Janessa 4 in Business & Finance ➔ Taxes ➔ United States
ALSO, am I going to have to pay taxes on child support received??
2007-09-20 02:22:10 · update #1
He did not use it as medical expenses that tax year because he is in the Army and we have free medical. That was all on the drunk driver. The check was for $3795.
2007-09-20 02:52:52 · update #2
If the settlement was to pay for damage to the car, not exceeding the amount of the damage, or if the settlement was to pay for physical injury, there is no tax owed. The settlement amount does not appear on your tax return in this case.
From your information, the money could not have been for lost wages.
No tax is owed on child support and child support does not appear on any tax return.
2007-09-20 03:35:54 · answer #1 · answered by ninasgramma 7 · 1⤊ 1⤋
You might or might not. If it was compensation for medical expenses or for damage to the car, then no. If it was for lost wages, yes. It could be that part will be taxed and part not. It should have been detailed just what it was for, and if for multiple things, how much was for what. If it wasn't, check with your insurance company.
And by the way, the next due date for estimated payments is Jan 15, something I sure would think someone would know who's been a CPA for 20 years!
And no, you don't report or pay taxes on child support you receive.
2007-09-20 03:12:36 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
I would imagine he'll have to pay on the settlement but I'm not sure about child support. I don't think you pay on child support. You can go to www.irs.gov and search their site. You should be able to find answers there. If you think you'll have to pay a good bit on the settlement then you should go ahead and make an estimated tax payment so the IRS won't charge you a penalty. The next estimated due date is Dec. 17.
2007-09-20 02:31:29 · answer #3 · answered by angela 6 · 0⤊ 2⤋
Yes, it is considered as income. Presumably you took the medical expenses back in 2003 as a deduction on your return.
If the check is large enough, you might have to pay an estimated tax payment to avoid being underpaid in the 3rd quarter. You have until Oct. 15 to do this. Get with whomever does your taxes to be sure.
Child support is not taxable to you.
2007-09-20 02:29:57 · answer #4 · answered by magnolia 5 · 0⤊ 2⤋
You do not pay taxes on child support received. You may have to pay taxes on the settlement, it depends on the settlement and your individual income situation. An accountant can tell you that based on these things.
2007-09-20 02:32:50 · answer #5 · answered by Anonymous · 0⤊ 1⤋
Depends on what the settlement check was exactly for. And child support is not taxable to the person receiving it, and not deductible to the person paying it. Alimony can be taxable/deductible, but not child support.
2007-09-20 02:58:19 · answer #6 · answered by Anonymous · 1⤊ 1⤋