Tax question

[Reboosted]

My ty was stolen earlier this year. The insurance co. paid me and now I am expecting a 1099 for about $12000. Anyone have any ideas how to get out of paying taxes on it? I just dont think I should pay taxes on being a victim of a crime. After all I had to buy another vehicle to replace it. Im considering talking to a tax specialist but not sure which one, any recomendations? I'm expecting the 1099 because this insurance co. gave me one when my red ty was totalled in an accident several years ago, should I be expecting one?

 

[Foot Performance]

Re: Tax question

Never thought of that but I would just talk to a tax agent that is a crappy deal though

 

[turboj91]

Re: Tax question

I have been in the insurance field for 25+ years and my involvement with total loss vehicles has been extensive. I have never heard of an insurance company sending a 1099 for a total loss vehicle. If they did this to you previously, they were wrong and they should not be doing this to you now. Is this your own insurance company or is it a 3rd party? If it is a 3rd party carrier, why do they have your SS # anyway? It makes no difference on what you paid for the vehicle vs the t/l settlement, it should not happen. If you talk to a tax atty, ask him why you received one the last time and ask if it is financially beneficial for you to sue to company for the tax liability you incurred due to their mistake (if so, be sure to add interest). Taxes/1099's are a Federal issue and subject to government law and not just laws in your state. Even when you are in an accident and you are injured, make a bodily injury claim and receive compensation for your pain and suffering, you do not get a 1099. Expose the insurance companies involved with your two claims and maybe I can help more.

 

[Poconojoe]

Re: Tax question

What box on the 1099 did they put the income? Box 3 is the only one that would come close to qualifing, since thats where taxable damage payments are put, but make the insurance comany prove its taxable damages. In 40 years of driving I've had at least a half dozen vehicles listed as totaled and mever got a 1099 for any of them. I've had home owner claims and never recieved one for them either. The only time I ever got one was for a pain and suffering / medical cost reimberstment payment and I got to deduct all my cost from it, so my net tax obigation was next to nothing

 

[turboj91]

Re: Tax question

What box on the 1099 did they put the income? Box 3 is the only one that would come close to qualifing The only time I ever got one was for a pain and suffering / medical cost reimberstment payment and I got to deduct all my cost from it, so my net tax obigation was next to nothing

You should have never received one for medical expense reimbursement! It is not taxable income!. Box 3 is for medical research reimbursement like when they do studies on you (ginnea pig) and you make money for participating in the study. I know you said box 3 was the only one close but it's not close enough.

I am sitting here with my sister who has worked in the medical insurance field for major medical insurance companies for 25 years+ and when I mentioned to her this subject, she was rothfl.

 

[Reboosted]

Re: Tax question

I havent received one yet, but I did get one for my red ty. I was rearednded by a drunk driver in that one, and it was totalled. I dont know if a theft is handled differently than an accident. In texas they figure part of your rate by your credit score. I guess I should contact my insurance company and see if they are sending me one or not. My insurance is state farm and I go through an agent. I never did claim the first 1099 as the form showed up well after my taxes were done and spent. I never do anything more complicated than a 1040ez or whatever the free computer version is.

 

[turboj91]

Re: Tax question

I did get one for my red ty. I was rearednded by a drunk driver in that one, and it was totalled.

Did the insurance company for the drunk driver pay your claim?? If so, they have no right to your social security #. How did they get it? Even if they did have it, sending a 1099 is just WRONG. Like I said, talk to your tax atty and see if legal action is worth the trouble. You can always make a complaint with the State Insurance Dept. The theft claim makes no difference. You should NOT receive one. It is NOT taxable income.

Yes, insurance companies let your credit score play a factor in your rates. Insurance is all about risk. If your score is low, they find you to be a higher risk and your rates will be higher. Somewhere, one of their rocket scientist actuaries decided that if you can't manage your finances and have an exceptional credit score, that you can't drive either.

 

[Poconojoe]

Re: Tax question

You should have never received one for medical expense reimbursement! It is not taxable income!. Box 3 is for medical research reimbursement like when they do studies on you (ginnea pig) and you make money for participating in the study. I know you said box 3 was the only one close but it's not close enough.

I am sitting here with my sister who has worked in the medical insurance field for major medical insurance companies for 25 years+ and when I mentioned to her this subject, she was rothfl.

It was an out of court settlenment, so it was an all inclusive payment, I got to deduct my lawyer fees and all the medical and associated expensive, from it and until I was done only about 10% of it ended up being taxable. By the way the insurance company wasn't mine, but they got my SS from my medical records, it wouldn't happen today with the HIPPA laws

 

[turboj91]

Re: Tax question

http://en.wikipedia.org/wiki/Income_(United_States_legal_definitions)

http://en.wikipedia.org/wiki/Income

http://en.wikipedia.org/wiki/IRS_tax_forms#1099_series

www.irs.gov/pub/irs-pdf/i1099msc.pdf Besides the basics, see page 4- right hand column where it explains box 3. You did not receive punitives or non injury compensation (by definition). Simply, you do not qualify for this “box” or for any other part of a 1099 requirement. Your not a contractor, an employee and are not receiving compensation for services or any other scenario covered under the requirements of a 1099.

You will not find anything in any of the above links that show where insurance payments for physical damages to your property or bodily injury settlements are taxable. If anyone used a CPA to prepare your taxes and they did not pick up on this, shame on them (and if someone finds something to prove me wrong, shame on me). If you did you own taxes and rolled along with the forms you had received and simply did not know any better, check your tax liability for that payment based on that 1099 and see if it is worth making an ammended return. If it is not worth your time, at least write a letter of complaint to the Insurance Dept for your state to let them know what is going on. I find it hard to believe that a legal dept overseeing the accounting dept at an insurance company has not picked up on this but then again, it is a write off for them for every 1099 they are able to send and have accepted. That's where they make out and their bottom line is all they care about, even if it means screwing the consumer.

 

[dgoodhue]

Re: Tax question

Technically, if you made money on a vehicle you are supose to pay taxes on it. I have never heard of 1099 issue for a totalled car. If you did get a 1099, write off all the expenses you occurred during ownership and obviously deduct your original price & sales/excise taxes paid.

If you do received any form of income with your SS# do not ignore them or omit them. The IRS checks almost all of them.

 

[Reboosted]

Re: Tax question

Well, talked to the insurance co. today. They say there is nothing with my s.s. number associated with the claim, so I should not get a 1099. Hopefully one dosent just show up the way the last one did. It did take almost an hour for them to find out. My agent said she had never been asked about it before. She had to call the main office and had her on hold forever. Apparently they never get asked about it either.