It depends, some settlements are taxable and others are not.
It depends on the type of settlement as listed on the final Settlement Agreement. If it is non-taxable, then you probably will not receive a 1099-MISC.
Physical injury or sickness settlements (for example, accident settlements) are non-taxable. They don't need to be reported unless you deducted medical expenses related to the injury on a previous tax return and received a tax benefit from the deduction. In that case, you'd report the medical expenses related to the incident as miscellaneous (other) income.
The proceeds you receive for emotional distress or mental anguish attributable to a personal physical injury or physical sickness are treated the same as proceeds received for Personal physical injuries or physical sickness above. If the proceeds you receive for emotional distress or mental anguish do not originate from a personal physical injury or physical sickness, you must include them in your income.
Please see this TurboTax Help article for more information. Please see IRS 4345 for more information on the taxability of settlements.
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