cantup Posted March 8, 2008 Report Share Posted March 8, 2008 Taxpayer received a check for 120,000 from an insurance company last year on March, because he had a car accident. he hire a Lawyer and he made arrangements with the insurance company before to go to court. Insurance company paid $500,000 to taxpayer's name. Taxpayer paid $380,000 to Lawyer. taxpayer didn't have an insurace policy at the time of the accident. My question is: Is it taxable this amount received for the accident? and if it is taxable how to report that amount... Line 21 other income? will he received a 1099 form from the insurance company? Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted March 8, 2008 Report Share Posted March 8, 2008 Those numbers do not pass the smell test. Your client might not understand the actual settlement. Most likely the attorney got one third, and the other amounts went to pay medical expenses. He might not have any taxable income, if the settlement was for physical damages. You need to read the actual settlement papers, or else get a letter from the attorney as to what the settlement went for. Quote Link to comment Share on other sites More sharing options...
OldJack Posted March 8, 2008 Report Share Posted March 8, 2008 It may be for personal injury which is not taxable. It may be for damages to the vehicle which is not taxable unless it is in excess of the cost of the repairs or value of the vehicle. Quote Link to comment Share on other sites More sharing options...
cantup Posted March 8, 2008 Author Report Share Posted March 8, 2008 Thank you for your answers and time to respond my questions. I request more information but taxpayer doesn't know if he will receive a form showing the amount he received. The amount received was for physical damages. Quote Link to comment Share on other sites More sharing options...
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