Question

Can someone interpret this?

Forum|Forum|1 year ago
March 3, 2025
1 reply
0 views

The Wildfire Act of 2023 HR 5863 states, the following below.

My question is in the part that mentions "Insurance or otherwise" Does that mean that

A. If an insurance payment was received in addition to any other relief including settlements, that because the insurance payment was received, any other relief including settlements are not exempt?

or

B. If an insurance payment was received that does not affect any exemptions other than the Insurance payment?

I hope that makes sense.

(1) In general.--The term ``qualified wildfire relief 
        payment'' means any amount received by or on behalf of an 
        individual as compensation for losses, expenses, or damages 
        (including compensation for additional living expenses, lost 
        wages (other than compensation for lost wages paid by the 
        employer which would have otherwise paid such wages), personal 
        injury, death, or emotional distress) incurred as a result of a 
        qualified wildfire disaster, but only to the extent the losses, 
        expenses, or damages compensated by such payment are not 
        compensated for by insurance or otherwise.

Not A Product Question

M

MAK70

Qualified Wildfire Relief Payments would be exempt income. It means that if you received BOTH an insurance payout AND other aid for the same expenses, you may have taxable income. So, if you received more money than you used for replacement or expenses related to your displacement, yo would have to report the excess as income.

S

sim8t3Author

So that means if let's say $60k was received for insurance and $500k was received in a settlement, that the settlement amount would be considered in excess of the of $60k, what if I personally did not receive the insurance payment (I.E. the check was not made out to my name), but a close relative did? Also how do you interpret "otherwise"? If worst case scenario there is a tax liability, on the settlement any idea what percentage it might be and would that be on the gross settlement? Thanks

R

RobertB4444

First, the person who received the settlement check would report it.

Second, the amount that you received in excess of the expenses that it was paying for is probably taxable income. So you would look at the amount that you received and deduct the cost of replacement that it was paying for and whatever is left over is what is taxable.

@sim8t3

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