Although your car was totaled, you received income from the insurance companies (insurance and gap). Income received from the sale of an asset (vehicle) is not subject to self-employment tax. However, there is also depreciation recapture to consider if the car was used and claimed on previous tax returns.
TurboTax can help you calculate the loss, gain, or depreciation recapture. To enter a sale of a business asset in TurboTax, you can follow these steps.
- Click Wage & Income from the left-hand side panel
- Click Edit/Review Under Self-Employment
- Click Review under Self-Employed Business
- Add/Edit Vehicle and make sure to mark I stopped using this vehicle in 2022
- Finish Interview Questions
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