Question
Are insurance proceeds taxable?
I was in an accident recently where the other driver was at fault. When I get the payout for the damages to my vehicle, will I have to report them as part of my income?
Answer
Ross joined The Zebra as a writer and researcher in 2019. He specialized in writing insurance content to help shoppers make informed decisions.
Ross h…
Credentials
- 5+ years in the Insurance Industry
Thanks for your question! In general, insurance proceeds, or money you receive as part of a claim or settlement, are not taxed. This is because insurance payouts are not actually making you money, but bringing you back to your previous status. The IRS only taxes income, while these proceeds are just "making you whole." This goes for bodily injury and property damage payouts.
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