Q: Tax treatment for lump sum settlement payment from lawsuit
Back in December 2018, heavy rain created a flood and my apartment unit got completely submerged in water. Due to this, I’ve lost everything inside my unit including a Toyota Prius.
I’ve been driving Uber as a job full time for the past 6 years.
I purchased (financed 100% @ 23K) 2018 Prius on June 2018 for Uber, and total loss on December 2018, but my insurance paid off my loan in full in January 2019.
I wasn’t able to drive for 10 days and couldn’t afford to buy a car until October 2019-using rental car.
When I filed the lawsuit, I also claimed;
* Income loss $2,250 (10 days)
* Rental vehicle $8,563 (10 months)
*Loss of Vehicle $23,000 (2018 Toyota Prius)
Would I be able to deduct above and possibly more?
Finally, I’m about to accept their settlement offer of 95K, should I have them itemize settlement amounts including the above for tax purposes?
A:
Unlikely they will itemize. You need to pay employment taxes on lost income, if any. You should allot a portion to lost income or IRS will come knocking. If you took tax deductions for casualty losses, and recover the $ for them that may also be taxable income. You should ask your attorney for a referral to a tax accountant for assistance.
Justia disclaimers below, incorporated herein.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.