Insurance Check.... if I keep the money, do I have to pay taxes on it?

Question

I have gotten an insurance check for hail damage. It's a big check, and I don't plan on getting the repairs done... do I file this as income? Is it already taxed? Any thoughts?

Answer 1

If the roof estimate is say $5000 and the check is $5000, you don't have a taxable gain, but you do reduce the basis in your property by the amount you didn't spend.  In the unlikely event that your basis in the house was less the amount of the check, you have taxable gain and would have to report it.

Answer 2

If the premium for the policy was paid with AFTER TAX DOLLARS then any payments are TAX FREE. Capitol gains/losses only apply when you sell assets. Insurance has nothing to do with capitol gains/losses.

No TAXES OWED ON DAMAGES DONE TO CAR.

Answer 3

No.  It's not income.

It reimburses you for the loss to your vehicle.   That money represents the loss in value your car has, due to the hail damage.

Answer 4

No, you don't pay taxes on it.

The money you paid your premiums with were already taxed when you recieved that money as income. you can't be taxed on the same thing twice.

The check you got from the insurance company is not income. Its to repair the car or replace your loss even if you dont use it for that purpose.