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Asked by: bustermcleod
i owed more than what it was worth but the insurance company is paying the truck off
chatsplas on Jan 04, 2013
You may qualify for casualty loss on tax return
Can only take your loss which is not covered by insurance….. Your out of pocket expenses
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deonejuan on Jan 04, 2013
If you mean taking a tax deduction on the 1040 long form, that we the taxpayer don’t know yet. The IRS will announce the minimum alternate tax for 2012 that one has to pay if they have a large amount of deductions.
So, yeah, the rule used to be: any loss NOT covered and NOT paid for by insurance.
Bash Limpbutt's Oozing Cyst© on Jan 04, 2013
You can only deduct uninsured losses. Since you appear to be covered in full, you have nothing that you can deduct.
To determine a casualty loss:
Subtract the Fair Market Value immediately after the loss from the FMV immediately prior to the loss. This is the total loss.
Subtract any insurance reimbursement.
Subtract $ 100
Subtract 10% of your AGI.
If anything is left, that’s your deductible loss.
Note: When gap coverage covers the difference between FMV and the outstanding loan, there’s a good chance that you will have a taxable GAIN once the dust settles.
Pascal the Gambler on Jan 04, 2013
The insurance company is paying the truck off, you have no loss.
ninasgramma on Jan 04, 2013
You have no deduction because the insurance reimbursement is more than the fair market value of the vehicle before the loss.
You do not have a gain as long as the insurance reimbursement was less than the purchase price of the vehicle. Assuming this, you have nothing to report on your tax return regarding the car accident.
RiddleMeThis on Jan 04, 2013
“but the insurance company is paying the truck off”
NO, you did not lose anything as your insurance is covering the loss.
tro on Jan 04, 2013
this would be claimed on Sch A under casualties, and you will need to know the market value of the car when the accident occurred, you will reduce that by the amount the insurance paid etc
it is entirely possible that it might not even qualify as a deduction even if you were able to use the Sch A
you use that form if you can itemize greater than your standard deduction
Quick Answers on Jan 04, 2013
How did you get the gap insurance? If you bought it yourself independent of the car loan, you are fine; if you got the gap insurance as part of the loan, you WILL get a 1099-C for cancelled debt income which *is* taxable on your return.
Your loss is limited to what the car was worth, so you won’t have a casualty loss at all.
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