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Posted by Paul Thomas, CPA on February 22, 2008, 11:40 am
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> My situation concerns line 21 of the federal tax form 1040. This line
> pertains to "other income".
>
> In May 2007, I received a dividend from my auto-insurance company. The
> amount of the dividend was $25.
>
> According to page 24 of the instructions for form 1040, dividends on
> insurance policies are taxable if the dividends exceed the total of
> all net premiums that I paid for the contract.
>
> ----------
>
> In late December 2006 or early January 2007, I paid $360 for auto
> insurance for the first six months of 2007. In late June 2007 or early
> July 2007, I paid another $360 for auto insurance for the next six
> months of 2007. So, I paid $720 for the year.
>
> So, what are my "net premiums"? What is the total of these net
> premiums? Is the $25 dividend taxable?
For your personal vehicle, they are not taxable or reportable as
income -it's just a return of what you paid.
If you deducted those amounts for business, then it is income to the
business.
--
Paul A. Thomas, CPA
Athens, Georgia
--
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