Is My Car or Truck Accident Award Taxable?
Car Accidents | Truck Accidents
A vehicle accident settlement is generally not taxable. But, this is not a hard and fast rule. The nature and circumstances of the settlement or judgement and laws of the state decide the taxability of the award from a vehicle accident. The state of Texas also has rules and regulations for any truck accident awards, with the answer being no to the taxability of the compensation amount.
Why a big “NO” to the taxing of the reward amount of vehicle accidents?
The insurance payment for property damage is compensation for restoring the property to its prior condition before the accident. The accident award can be taxable only if it exceeds the cost of the damaged property, which is almost rare in all the cases. The accidental award is just for compensation, and there are minimum chances that the reward appears as an income to the property owners. The insurance companies are also very keen on the amount that is given to the property owners. The calculation of the compensation money involves several aspects.
The price of vehicles like trucks, cars, etc. decreases as the time passes after purchasing. And the amount received in the adjustment of the vehicle is generally less than the cost. The compensation amount depends on many factors, like how old is the car and what kind of insurance is covering the vehicle. So, you are not getting any profit over the price of the property. The government cannot ask for the taxes on the money, which is not an earning for you.
Laws and rules for vehicle accident settlements pertaining to the state of Texas
There are a few state laws which need to be understood regarding accident settlements in the state of Texas. First of all, you need to file a claim against your damage and it has to be done within two years from the date of the car accident. For personal injury claims, the limitations are codified in Texas Civil Practice Code section 16.001. The car insurance comes into play in almost each kind of claim after the accident, whether you are making any claims with third party car insurance or under your own policy. Some of the Texas car insurance rules are given below:
- In Texas, “fault” system is used for auto insurance, i.e. drivers have to pay for the accidents they cause. A driver, passenger, or pedestrian who suffer an injury in the crash decide to file a claim with his or her own auto insurance (known as the first-party claim). In another case, the injured person can ask for compensation from the other driver’s insurer (known as a third-party claim). The third case is that the injured person may choose to go to the court and file a lawsuit for the compensation.
- Drivers need to carry auto insurance in order to get the state’s financial benefits. The insurance coverage of the drivers is known as “30/60/25”, which pays property damage bills, medical bills, and other costs. You also need to carry your insurance proof in the vehicle to present the document to law enforcement officers during any traffic stop.
- Drivers do not need to buy uninsured or underinsured motorist coverage in Texas.