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What taxation should be expected on insurance for a busines fire? |
My mom lost her business of 20+ years to a fire this week. Now with no way to make income any time soon i'm worried about how the insurance money will last her. I'm worried that the IRS will tax it and she'll end up with nothing to live off of after being taxed and paying business debts. Is her insurance money going to be hit hard with taxes? The claims settlement for a fire is not going to be taxable. The insurance is reimbursement for her loss and is not income. The only way she would have to pay a tax on it if the insurance proceeds exceed her loss. Then the difference is a gain which is taxed. Insurance money paid out for a fire, to cover the loss of contents, earnings, building, etc, is NOT income - it's reimbursement for your expenses, and not taxable. |
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