Yes - the proceeds from your lawsuit are taxable
What do you mean it was confirmed the settlement was not reportable. It sounds as if you received a 1099-MISC reporting the income.
Follow these steps to report your settlement.
This is how you should enter it in TurboTax: per Irene2805
- Click on Federal > Wages & Income
- Scroll down to the Other Common Income section and click on the Start/Update box next to Income from Form 1099-MISC.
- If you previously entered a 1099-MISC. in your return, you will be brought to the 1099-MISC Summary page. Click on the Add Another 1099-MISC. box to add a new form [or Edit to change an existing form].
- If you haven't already entered a 1099-MISC, answer Yes to the question Did you get a 1099-MISC? (even if you didn't get one).
- On the Let's get the info from your 1099-MISC screen, complete the top part and then enter the award amount in Box 3 Other Income.
- Fill out any other boxes from your paper 1099-MISC, then click Continue.
- Enter a reason for the 1099-MISC,
- On the screen, Does one of these uncommon situations apply? select This was money from a lawsuit settlement and then answer the back wages question before clicking Continue.
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