Get your taxes done using TurboTax

Well, pretty sure you are not getting a tax form for the income at this point, but it is still unclear how the court has classified the payment.    You may want to check with the CPA that 'booked the $5K loss'.    Generally, all settlements are taxable unless specified by the tax code.   For damages, the two most common exceptions are amounts paid for certain discrimination claims and amounts paid on account of physical injury.   

Awards and settlements can be divided into two distinct groups to determine whether the payments are taxable or non-taxable. The first group includes claims relating to physical injuries, and the second group is for claims relating to non-physical injuries.   Within these two groups, the claims usually fall into three categories:

1. Actual damages resulting from physical or non-physical injury; 
2. Emotional distress damages arising from the actual physical or non-physical injury; and 
3. Punitive damages - Punitive damages are not excludable from gross income 

If the income is not excludable from income and you do need to report it,  here are the steps to report ordinary or wage income without a tax form in TurboTax:

1. Sign into your TurboTax account.
2. Select Pick up where you left off or Continue your return.
3. Select Federal from the left side menu.
4. Type other reportable income (use that exact phrase) in the search bar and click on the Jump to other reportable income.   Copy and paste the phrase if you don't get the link.
5. On the Other Wages Received screen, select No at Did you receive any other wages?   Select Yes only if your settlement was employment-related; you’ll be directed to enter your wage income.
6. You should land on the Miscellaneous Income screen, scroll down and click Start or Revisit next to the last item - Other Reportable Income.  
7. On the Any Other Taxable Income? screen, select Yes.    If you already have miscellaneous income reported, click on Add Another.
8. On the Other Taxable Income screen, enter a description (taxable settlement) and the amount determined to be taxable, then Continue.
9. On the Other Miscellaneous Income Summary screen, confirm the entry and select Done.