Get your taxes done using TurboTax

The IRS does not have a minimum threshold for reporting income - you are required to report all your income, whether or not it is reported to you on a Form W-2 or Form 1099.

Depending on the reason you received this settlement, it may or may not be taxable. Payments received as compensation for personal injury or financial damages are generally not taxable and not reportable. Punitive damages are taxable.

If taxable, report the payments as  "Other Reportable Income":

• Type "other reportable income" in the search window (or in the Search Topic window for desktop versions) 

• Click on "jump to other reportable income  (or "other reportable income" in the Search Topic results) 

• Answer "No" to "Did you receive any other wages?" 

• Select "Other reportable income" from the Miscellaneous income list 

• Select Add another Income item  on the Other Miscellaneous Income Summary screen 

• Enter a Description and amount,  then click on Continue 

A corresponding amount will be entered on line 8 of Schedule 1 and Form 1040.