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Level 2
posted Jun 1, 2020 4:54:04 PM

Are overpayments/refunds considered taxable income?

I received a check in 2019 for "overpayment of registration" from the dealership I leased my car from. It's about 20 dollars and is a refund for paying more than I needed to pay to them to get the car registration renewed.

Is this refund considered taxable income even though it's basically my money coming back to me?

Similarly, my escrow accidently paid my homeowner's insurance provider twice the required premium, so my homeowner's insurance provider sent me a check personally as refund of the double paid premium.

Is this considered taxable income?

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1 Best answer
Expert Alumni
Jun 3, 2020 9:22:06 AM

It is only considered taxable if you previously deducted it on your taxes. For example, if you itemized in 2018, took a deduction related to the car registration, then received a refund of a portion of the deducted expense, you must claim the refund as income in 2019.

 

Homeowner's insurance is not deductible unless it was for a rental or business property. Therefore, any reimbursement of overpayment would not need to be claimed as income.

1 Replies
Expert Alumni
Jun 3, 2020 9:22:06 AM

It is only considered taxable if you previously deducted it on your taxes. For example, if you itemized in 2018, took a deduction related to the car registration, then received a refund of a portion of the deducted expense, you must claim the refund as income in 2019.

 

Homeowner's insurance is not deductible unless it was for a rental or business property. Therefore, any reimbursement of overpayment would not need to be claimed as income.