Auto Insurance Claims: Insur. Proceeds, pain and suffering settlement, personal belongings

Question
I was injured as a passenger in a car when a diesel hit us. I was compensated (so far) 468.00 for personal belongings ....like my clothes and such; I got a 1099 from the lawyer who handled it (& it appears that it may not be filled out correctly), so, am I responsible for income taxes on that money?

Answer
Hi Fred,

You should not have any taxes due for reimbursement of damaged personal property. In most cases there will be no taxes due even for a pain and suffering settlement depending on how it is structured.

You will need to contact the attorney and ask him/her why you received a 1099 and tell him/her that you should not have to pay tax on reimbursement money. If you do not like the answer you receive, you may want to file a complaint against the attorney with your State Bar Association.

I hope this helps
Richard Hixenbaugh