Auto Insurance Forum

Is my auto insurance claim check taxable?

Bill, Texas

No, your insurance claim payment cannot be taxed.

Auto insurance claim payments for bodily injury, property damage, and pain and suffering are generally exempt from federal and state income tax, although they must be reported to the IRS, says Texas attorney James Holmes.

But there are some exceptions to this rule — for instance, if you sue someone in court over an auto accident and are awarded punitive damages. Holmes says your best course of action is to visit a tax attorney to make sure none of those exceptions applies to you.

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