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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 53671
Experience:  29 years of experience as a tax, real estate, and business attorney.
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Someone damaged my car and is paying me cash for the damage.

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Someone damaged my car and is paying me cash for the damage. My insurance company is not involved. Must I report this damage compensation as income on my tax return?

Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good morning. No, this is not taxable income because it does not represent an increase in your net worth as a result of something you did. Rather, it is simply payment for a loss to put you in the position you were in prior to the accident. As such, it is not income and thus not reportable or taxable.

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to be of service to you. Please be aware that the information provided here is
not legal advice. Rather it is simply general information. All states have intricacies in their laws
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