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Do you pay taxes on an auto insurance settlement?


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Answered 2010-05-14 14:29:57

I had a huge settlement from an auto insurance company and it was not taxed. However I believe that was because my attorney negotiated a type of settlement that made it non-taxable. I thnk it has to be considered "punitive damages" or something like that for it not to be taxed.

Update - Generally, amounts paid for personal injury and property damage are NOT taxable. Amounts paid for punitive damages and loss of income ARE taxable.

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No. This type of settlement is not generally taxable.


The auto insurance settlement wouldn't be taxable unless you realize a gain from it. Being on Social Security Disability doesn't exempt you from paying any taxes that may be due as a result.


You do not generally have to pay taxes on an insurance settlement claim. You can check with your tax firm or accountant for the rules specific to your state.


A settlement is usually split into two parts, recovery of damages sustained, and pain/suffering (putative). For recovery of costs, the settlement is not taxed. For pain/suffering it is taxed.


No, the insurance settlement is considered compensation for a loss, not income.


You may have to pay capital gains taxes on a life insurance settlement in addition to any income taxes you might owe. Consult with a CPA or tax attorney to learn more about what tax consequences that a life insurance settlement may have.



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it is the computer that answer it


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"http://wiki.answers.com/Q/Do_you_have_to_pay_taxes_on_your_court_settlement"


The settlement will be listed as income on your Federal tax return. You will pay the tax percentage of the bracket you are in that year.


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Yes it should, but the auto insurance company may have to pay the medical insurance after the claim is paid.


If the president has an auto, then I would assume that he/she would.



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