"Gulf Coast residents unsure if claims are taxed" but who pays them for lost income?

[jody]

Gulf Coast residents unsure if claims are taxed AP New Orleans

Now he's among the people up and down the Gulf Coast reeling from the oil spill disaster who are surprised — and frustrated — to find out the Internal Revenue Service may take a chunk of the payments BP PLC is providing to help them stay afloat.

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Accountants have been trying to nail down the implications for thousands of taxpayers after President Barack Obama said BP would create a $20 billion disaster fund and provide another $100 million for oil workers who lose their jobs because of the six-month moratorium on deepwater drilling in the Gulf of Mexico.

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The IRS would not comment on whether exemptions would be made, citing a policy of not answering questions on specific tax issues. Adding to the confusion, Kenneth Feinberg, who was chosen by President Barack Obama and BP to oversee the Independent Claims Facility, said Friday it hasn't been determined if the payouts will be considered taxable income.

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That doesn't sit well with Cherie Edwards, who is now only working one day a week at her job booking charter fishing trips at Zeke's Landing in Orange Beach, Ala. The lost hours due to the oil spill are costing her about $270 week.

Poll at New York Daily News, question “Should the IRS tax Gulf oil spill victims?”

BP can write-off its costs of the oil disaster but how can people in the Gulf Coast states write-off their lost future income?

In a corporate state, the game of risky business ventures is “Heads corporations reap obscene profits, Tails We the People pay all losses” aka “Corporations get the gold mine and We the People get the shaft”.

[SoCalDem]

1. Cherie... If your lost income is "replaced", you would still owe taxes

why would you expect to get wages replaced , and get them tax-free?

IF the replacement is equal to the money lost, that's fair...but if it's significantly less, it's another issue to be sure..

What I would like to see is a a one-time check equal to a year's wages, paid to each affected person, and the pre-spill value of their home/business offered TAX FREE, as an incentive to relocate to "greener pastures".

[pitohui]

5. what greener pastures are those? seriously?

every niche is taken, every job is taken, we have widespread unemployment in the usa, and until the spill, southeast louisiana was actually one of the least affected states by the recession, because of the oil industry, re-building after katrina, etc.

we WERE some people's greener pastures, hence the influx of filipino and latin american workers into the area post-katrina to take advantage of the post-k labor shortage

there is no place left for people to go, give them a year's wage, tell them to go...somewhere...we know not where...but somewhere...their community isn't and their family isn't and where there aren't any jobs anyway?

people should be compensated and replacement of a year's wage is a start, replacement of any spoiled homes/businesses is a start...but telling them they only get the money if they move to some fabled greener pasture that doesn't exist would just be cruel

the people came back (or came here in the first place) because it was the best option for them and their talents and because there is important/meaningful work to be done here

this idea that we should abandon southeast louisiana, it's beginning to get old and it stinks worse than the oil if you ask me

no offense, i'm just tired of hearing it

there are no jobs in the midwest, how is anything supposed to be helped by telling ppl to uproot and move north?

just my opinion, if somebody wants to take the $ and run, i don't criticize them for it, i just don't see how it would work out for a large number of people

we already had one diaspora, it ended w. everybody bitching abt how we caused all the crime in texas -- believe or not, refugees are not generally considered desirables and they're not always treated well or given wonderful chances

[SoCalDem]

6. I'm not suggesting that they MUST leave, but truthfully, I bet a LOT of people wish they could

and many may have relatives elsewhere who could help them out. Staying in a ruined place where the only job you know how to do is gone (perhaps for the rest of your lifetime) is a pretty grim future. With a "stake", many people could have that "second chance", and could lessen the load for the ones who choose to remain.

[jody]

8. pitohui you speak for my relatives in the Gulf states and they are legion since we've been there

since the 1700s.

:puke: on everyone who caused or allowed the BP disaster to occur.

It will take decades if ever for the Gulf to recover.

[peacefreak]

2. The IRS taxes unemployment benefits

so they would probably tax Spill Victims also.

[leftofcool]

3. Everyone has to pay taxes on income, even replacement

income which is what this would be. Mother IRS is going to get her money.

[pitohui]

4. income is taxable, always has been...

not sure i'm seeing the issue here

if you are receiving reimbursement for "lost income," yes, it's taxable

if you're receiving reimbursement for an injury, lost property, etc. it is not taxable because you are just getting back what you shouldn't have lost in the first place

example -- you hit my car, your insurer pays to have my car fixed and a small fee to me to rent a car while it's being fixed plus a small fee for me to see a doctor (this actually happened) -- none of this $ to me is taxable

example -- you fire me for not having sex with you, i get a settlement thru my attorney for the lost income -- that is taxable because if you had allowed me to work and earn the money, it would be taxable income

there are grey areas, and for those you need a tax guy, example a friend got an award that the jury called "lost income," he paid tax on it, later, he discovered thru his tax guy that because the income was lost due to an INJURY (an assault that kept him from working) the money was not taxable -- tax guy sent in a copy of the judgment, circled the part describing the assault, and IRS direct deposited the money back to my friend

where money is involved and you're not sure, visit irs.gov and if you're still not sure, for god's sake, there are so many tax dudes available to hired in this world, PAY ONE OF THEM and find out, it's a worthwhile investment

it looks to me any $ paid for lost income from the spill (loss of job) would be taxable, $ paid for destruction of property, loss of worker's life etc. would not be -- in those gray areas, consult someone so you have an expert's opinion to cite, not just "i don't feel like paying so i'll pretend to think i don't owe tax on this"

[Liberal_in_LA]

7. kick! To keep oil spill news prominent