Do Taxes need to be Paid on Insurance Payouts?
If a person gets a large amount from an insurance company ( to pay for damage to their property and or to pay for living expenses <--- this is about a home that burned otu), is it considered income? And will I need to pay taxes on this?
Thank you in advance for any help you can give.
- Casey YLv 71 month ago
As long as you arent taking any loss for the reduction in property value, you wouldnt pay taxes on the payout.
- NALv 71 month ago
Living expenses can be taxable under some circumstances. See IRS publication 547. Ditto if your reimbursement is more than your adjusted basis.
- StephenWeinsteinLv 71 month ago
Sometimes, but not usually.
If you deducted the property damage on your taxes in an earlier year, then the insurance payment is taxable.
If you never deducted the property damage on your taxes, then the insurance payout for property damage is not taxable.
- Anonymous1 month ago
No, it's not taxable.
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- ShayLv 71 month ago
No. You do not claim insurance payments as "income" on your taxes. It is not actually income. The money would have been used to cover the costs of your loss. Even if you can cover your loss and have some money left over, it is still not "income" and you don't need to claim it.