I received a 1099-Misc for amount my auto insurance paid a body shop to cover repairs to my vehicle after an accident. Is this amount supposed to be taxed as income?

[charlie-starling]

My vehicle was damaged in a crash.  I filed a claim and my insurance company wrote a check to the body shop for $1449.19 to cover repairs.  Now I have received a 1099-Misc from my insurance company for $1449.19, categorized as Nonemployee Compensation.  When I enter the 1099-Misc info into Turbo tax, my federal refund is reduced by $213. Is this correct, and if not, how should I handle this?

[DDollar · Accepted solution]

You should not have received a 1099-Misc from your insurance company for payment of an auto claim.  You need to contact your insurance company and get them to issue you a Corrected 1099-MISC with a zero amount.  If you claim it on your return you will have to pay taxes on it, and you should not owe tax.  If you file without it, expect a letter from the IRS.  Reply by letter and explain the situation.  Also include proof of your auto claim -repair receipts, estimates, etc.

[RaleighKris]

I also received a 1099-misc from insurance for a “corrective payment”.  The car insurance co overcharged me on my monthly premiums for almost a year and when they realized it, they gave me my money back plus $3 in interest for a total of $939.  Because it was over $600, they said a 1099 misc had to be sent to me.  Why do I have to add that as INCOME to my tax return??? It is my own money being returned to me?