I received a settlement for $10,000 from Wells Fargo for a vehicle that was financed through them that repossessed while serving overseas in the US Army. Is this taxable?

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I received a settlement for $10,000 from Wells Fargo for a vehicle that was financed through them that repossessed while serving overseas in the US Army. Is this taxable?

The settlement may or may not be a taxable event depending on the situation.

Generally, if these settlements are from overcharged interest, on nondeductible interest payments such as credit card debt or auto loans it is not a taxable event and does not need to be reported.

You may need to check your 1099-MISC or check stub in order to see how they are coding the settlements. The settlements are meant to make you whole after an unlawful repossession of your vehicle, not to increase your income. Also, you may have been sent a letter along with the settlement check that may give you more explanation for what the purpose was for the settlement.

I found the link that gives us more direction. http://www.jag.navy.mil/organization/documents/tax/TIM-03-13-Tax-Treatment-of-Compensation-Payments-...

1. You must include the lump-sum portion of the settlement and report it on your taxes. However, you may be able to exclude all or part of this settlement in in gross income, such as non-deductible expenses. Also, the FMV of the vehicle at the time of repossession is the amount of the settlement that may be excluded.

2. You must include the interest payments given to you on the lump sum portion of the settlement.

[Edited: 01.29.17 8:51 pm]

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I received a settlement for $10,000 from Wells Fargo for a vehicle that was financed through them that repossessed while serving overseas in the US Army. Is this taxable?

Have you received a 1099-MISC or other tax form relating to this?

I received a settlement for $10,000 from Wells Fargo for a vehicle that was financed through them that repossessed while serving overseas in the US Army. Is this taxable?

Not yet

I received a settlement for $10,000 from Wells Fargo for a vehicle that was financed through them that repossessed while serving overseas in the US Army. Is this taxable?

I'm also still checking some more sources for you for a more definitive answer.

I received a settlement for $10,000 from Wells Fargo for a vehicle that was financed through them that repossessed while serving overseas in the US Army. Is this taxable?

The settlement may or may not be a taxable event depending on the situation.

Generally, if these settlements are from overcharged interest, on nondeductible interest payments such as credit card debt or auto loans it is not a taxable event and does not need to be reported.

You may need to check your 1099-MISC or check stub in order to see how they are coding the settlements. The settlements are meant to make you whole after an unlawful repossession of your vehicle, not to increase your income. Also, you may have been sent a letter along with the settlement check that may give you more explanation for what the purpose was for the settlement.

I found the link that gives us more direction. http://www.jag.navy.mil/organization/documents/tax/TIM-03-13-Tax-Treatment-of-Compensation-Payments-...

1. You must include the lump-sum portion of the settlement and report it on your taxes. However, you may be able to exclude all or part of this settlement in in gross income, such as non-deductible expenses. Also, the FMV of the vehicle at the time of repossession is the amount of the settlement that may be excluded.

2. You must include the interest payments given to you on the lump sum portion of the settlement.

[Edited: 01.29.17 8:51 pm]

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