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I got an accident settlement check in 2016. Can I claim taxes on it?
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A settlement for personal injuries is not taxable, including a settlement for pain and suffering. The payment does not need to be reported. However, if the award was for punitive damages it is taxable and does need to be reported.
Please be advised: Legal fees to obtain the settlement are not deductible and damages to repair or replace your vehicle or to pay medical bills are also not taxable. If you need to enter your settlement, follow the steps below.
To enter the proceeds, if they are taxable, you will enter them in the Miscellaneous income section.
- Click Federal Taxes tab
- Select Wages & Income
- Scroll Down to Miscellaneous Income
- Click Start or Update
- On the next screen, scroll down and click Start next to Other Taxable Income
- Answer the questions regarding the settlement.
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