topic Motor Vehicle Accident in Deductions & credits

Motor Vehicle Accident

ebbjak — Wed, 17 Mar 2021 14:57:09 GMT

My wife was involved in a terrible accident and she was not able to work, due to the injuries she sustained by a driver that ran a red light. The state we live in, MN, is a "no fault" state, and there are loss wages available via the insurance company, up to a certain limit. My question is, "are those funds taxable?" This is NOT a settlement, but rather a standard benefit that is attributed to No Fault insurance in this state.

Re: Motor Vehicle Accident

ToddL99 — Wed, 17 Mar 2021 15:22:33 GMT

How were these payments reported to you and your wife - 1099-MISC, W-2?

If this benefit was paid for "lost wages", then it is taxable.

Compensation for lost wages is intended to replace what you would have earned had you not been injured. If you don't make a complete recovery, you may also receive compensation for future lost wages.

Wages are always taxable, which means compensation for lost wages is also taxable.

Re: Motor Vehicle Accident

ebbjak — Wed, 17 Mar 2021 15:36:38 GMT

The payments were not reported on any tax forms. The only thing we received was a couple of checks - that's it. And I've asked numerous people, including my tax guy, and I get different opinions - there doesn't appear to be any consistency. The only thing I've been able to find is from the IRS, but it's dated 2013 Under that letter, they would NOT be considered taxable.....Number: [[social security number removed]]Release Date: 3/29/2013