That is a whole lot of “duh!”. Yes, it would be nice to have universal health care. But for those that can, and until we have a reasonable system, properly insure yourself. My very example is probably a proof case of your first paragraph and what I talked about: Poor people with minimal insurance. You can sue them. but you’ll lose out.
If you aren’t living paycheck to paycheck, get better auto insurance. Even more-so if you own a house and don’t want to lose it.
I don’t have a house to loose.
Frankly, I am one of those people that if you sued there’d be little to confiscate. I’m not living paycheck to paycheck, but there is no way I can, with my current job, amass a great deal of wealth. I do insure my vehicles, and because they’re fully owned I insure them for liability and not the physical vehicle itself but I can only afford so much. No one who sues me is ever going to collect a multi-million award for the simple reason I do not have that many assets and likely never will.
What do you consider “proper insurance”? I have a friend with some wealth who once stated what he considered a minimum level of insurance, and honestly the premium per month would exceed what I was paying in monthly rent at the time! (As I mentioned, I’m doing a bit better these days - now it would only be about 2/3 of what my rent is). Then again, he had a LOT of assets to protect. And the means to do so. What is your definition of “proper”?
For people below a certain income level - and there are tens of millions of people in that category - the system is NOT reasonable in any sense of the word. Any sort of serious illness or injury could bankrupt them even with insurance. “Proper” insurance is too expensive to purchase because, to be frank, you must eat and have a roof over your head before other considerations. Always and ever one paycheck away from disaster and no way to get off that treadmill.
These days I’m a bit better off, but for years I purchased the legal minimum of vehicle insurance not because I wanted to deprive some other party of satisfaction in the event of an accident but because even after food stamps and a garden to grow food and family helping me out when they could and working two jobs for a time and looking for better that was all I could afford. Literally. At one point selling our wedding rings to make ends meet for another couple months on an apartment that had once been nice but was at the time leaking every time it rained and just generally falling apart because that was all we could afford at the time.
If you’ve never been that sort of poor I’m not entirely sure you understand. Sure, there are jerks who are just cheap bastards but quite a few people are driving around with minimal insurance, or even no insurance, because there’s more month than money.
When you’re already living on the edge of disaster the prospect of being sued just isn’t so alarming, there is a strong tendency to laugh at the prospect of bankruptcy when you’re already bankrupt and scavenging cans off the side of the road hoping you can make the rent this month.
The middle class in the US lives in fear of falling into poverty. Those actually in poverty just ignore the risks because they no longer have much to lose. Threats of “you’ll lose your house!” ring hollow to someone who not only doesn’t own a home but is themself facing homelessness because their minimum wage job doesn’t pay enough to cover the rent even for a run-down place in a slum.
This is the issue with private health insurance - even with good insurance, some have co-pays or deductibles or whatever euphemism the insurance company uses, ensuring that the insured themselves must shell out thousands before insurance kicks in for part. A lot simply don’t have that much. The “lucky” ones can pay off that catastrophe over the next decade, assuming it’s not the breadwinner in the hospital.
Not to mention the financial incentive in a private insurance company is to deny all claims if possible for whatever reason. (What Grisham novel was that?)
I don’t know if the Grisham novel, but we once acquired a company that had a captive workers compensation insurer and administered their own claims. The claims managers seemed genuinely surprised that summarily rejecting 100% of all claims initially was not SOP in WC.
The Rainmaker.
Regarding income taxes on donations: even if the donations are taxable, wouldn’t the recipient be allowed to shelter them by deducting the medical expenses?
I know that the expenses have to exceed some percentage of the recipient’s income. But I’d think that would be the case for most people injured in a shooting.
Well, sure, that’s possible - but most people aren’t up on sheltering their money from taxes in that manner, which leaves the question of whether or not they can get good tax/legal/financial advice.
While recuperating from disaster.
It’s a fucked-up “system”
For the third or fourth time, and links have already been provided. These donations are NOT taxable to the recipient. And the amount doesn’t trigger anything. I don’t know why one poster insists on repeating her error in FQ.
What about if the go fund me was intended for $500k, but it unexpectedly took off and rises to $1million?
Is it still a gift? Or taxable?
Any gift of over $16K is taxable and is to be paid by the giver, not the receiver. Regardless of the amount.
So if some individuals gave the person more than $16k they would need to pay the tax, not the receiver.
It doesn’t matter how much the GoFundMe raises - if the funds are truly gifts (there is no expectation of anything in return) the funds are never taxable to the recipient. They might be taxable to the donor under certain circumstances. There is an annual exclusion of $16, 000 per donor per recipient. That means I can give my daughter $16K and my son $16K without paying gift tax. And my husband can also give each of them $16K without paying gift tax.
If I give an individual person more than the excluded amount, I have to file a gift tax return for the amount over the excluded amount. But I still don’t pay tax - the gift tax return just keeps track of the non-excluded amount from year to year. When I die, if the total of my estate and all the non-excluded gifts I made in my lifetime is more than the lifetime exclusion amount ( about $12 million in 2022) , then my estate will pay tax on the amount over the exclusion.
There was a cute blog post by Wozniak many years ago where he describes a visit to Vegas. His daughter wanted to know what the slots machines in the restaurant were all about, so he gave her a few dollars to let her learn how they just drain your money. She won $14,000.
So it turned into a lesson on taxes. Since she was too young to gamble, he had to claim the prize. Pay $7,000 income tax on the prize. Then he had to give his daughter the $14,000 she’d won. Pay another $7,000 in gift tax since he’d already given her her limit for the year. So she got $14,000 from the slots company, and he paid the government $14,000 out of his pocket.
I assume this was because there’s some limit at which you pay the taxes that year? Or perhaps he meant he owed the government that eventually? Or is paying up front an option?
These numbers make no sense. Where was he living that the marginal income tax rate was a combined 50%? And he wouldn’t just have to have exceeded the gift exemption for the year but to have exceeded the lifetime limit, which has been in the millions at any time in the last few decades (currently $12M).
I found a slightly different version :
The downside of this is that Sara gained $7500, I lost $7500, the government gained $7500 and the casino lost $7500. You see, I had to fork out the $7500 to my daughter and collect the winnings myself. But about half the winnings would be paid by me on my taxes as income, and other half of $7500 would be paid as gift tax for giving the winnings to my daughter (I’d already transferred the maximum yearly tax free gift of $10,000 to each of my kids).
He had to have meant that his estate would eventually pay taxes on that gift because his estate plus excess gifts would be over the lifetime exclusion limit. There’s no way to pay at the time the gift is given , and no reason to want to as the tax laws (and finances) may change between when the gift was given and the donor’s death - in 1997, the lifetime exclusion was something like $600K . You might think that a gift you gave in 1997 would ultimately be taxable someday - but you might live to 2022 and never get to to the $12 million total for estate and gifts.
I was shocked at how little it cost to up the bodily injury coverage, property damage coverage, and uninsure/underinsured coverage to the max on our one auto, and add a large umbrella policy (we had to max the auto to get the umbrella which covers our home as well). We previously had fairly low coverage (not the mins) and adding that upped our monthly bill by $40/month. You don’t have to do anything to the collision or comprehensive.
Here are the costs for our coverage for 6 months:
That all combined is a little over $60/month (as I said, we didn’t previously have the mins so it did add about $40/month).
I grew up poor, very poor, and wouldn’t say I escaped poverty until I was 30. I had years without a car because I couldn’t afford one. I get it. If you don’t have much to lose, don’t worry about this. But if you do, then worry. I’ve seen what a major accident can do. It sucks.
Well, yeah, it’s assumed that, as a homeowner, you are inherently more responsible and a better human being than any mere renter.
Since I don’t own a home there is zero chance for me to get an “umbrella” policy.
As I already said - I do not have collision coverage. Damages to my vehicle I pay for myself. All my auto insurance money is going to liability and medical coverage.
Yes, that is very true.
Is that true? I have both a renter’s policy and an automobile policy with Allstate and am planning to add an umbrella policy.
GEICO will also sell you an umbrella policy if you have a renter’s policy that covers personal liability. I think the issue is often that renters don’t have any personal liability coverage.
Also, for many years I lived in a zip code where absolutely no one would sell us a renter’s policy. That was “fun”. Also really pissed me off the time I called to ask about a renter’s policy and the agent said “why do you live there? You’re not black!” (the city was, and still is, 85% African-American but honestly, folks of other colors do live there). So I’ll let you draw your own conclusions as to why at least some renters have problems getting insurance.
Is that legal? I don’t know - I’m not a lawyer. Just reporting that for 20 years we couldn’t get renter’s insurance due to our zip code per the few people at insurance companies will to be honest as to why they wouldn’t provide that sort of coverage.
I live in a better neighborhood now, so getting coverage isn’t as hard but I do find renting rather than owning to be a problem at times. Again, the assumption is that people who rent are inherently worse risks than people who own.
The upside is that IF you can get renter’s insurance it’s cheaper than homeowners’.
Yeah, there’s a lizard, an emu, and a bunch of so-so comedians who all want to tell you that you can bundle insurance and only pay for what you need.
I had a crappy old motorcycle years ago, and insurance was about half the value of the motorcycle. Any accident would be a write-off. When I remarked on that, the agent said “but if you hit someone with that bike no matter what it’s worth, they’re just as badly injured.”
Which is why the various insurance features are NOT bundled. Protecting the bike and protecting the rider from liability are two different features. I’ve certainly had any number of run-out cars over the years with no collision and comprehensive coverage despite carrying the highest liability amount they would sell me against those same run-out cars.
Separately …
The intent of an “umbrella” policy is to be a high limits and all-perils liability shield above and beyond your existing liability shield product(s). It isn’t intended to be, nor is it priced to be, your first and only line of defense against personal liability. It’s the catastrophe backup plan, not the primary plan.
As such, if for whatever combination of circumstances, you don’t have primary liability insurance against the main perils we all face which are being a vehicle owner/operator and/or a homeowner and/or a small business operator, then they’ll decline to sell an umbrella policy. They’ll (probably) be happy to sell you a liability policy first for the mail perils and then an umbrella to back it up.