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If you received a 1099-NEC for your settlement, then the settlement is taxable. A 1099-NEC is issued when you receive non-employee compensation. If your legal settlement represents tax-free proceeds, you don’t get a 1099 form. Check with the organization who issued your 1099-NEC to verify if the income reported on your 1099-NEC should not be taxable.

To report your settlement income as other income, follow the steps below.

1. Launch TurboTax
2. Search for 1099-NEC with the magnifying glass tool at the top of the page
3. Click on the Jump to 1099-NEC link at the top of the search results 
4. Click Add a 1099-NEC
5. Enter the information as shown on your form
6. Type Settlement on the screen that says “Describe the reason for this 1099-NEC”
7. The next screen will say “Does one of these uncommon situations apply?” Select “This was money from a lawsuit settlement” and answer the question “Was any part of the lawsuit settlement for back wages?”

 8.  Select Continue.

Please see the TurboTax articles Are legal settlements taxable? for more information and  Where do I enter an award from a taxable legal settlement?