If
you receive a settlement that includes money for medical expenses you
deducted in an earlier year, the amount that you deducted is taxable in
the year you receive it, but only to the extent that the deduction
actually reduced your taxable income.
If a settlement includes funds for future medical expenses, the
amount is not taxable, but you also cannot deduct the future medical
expenses except for any amount that exceeds the award.
TurboTax Deluxe will help identify which of your medical expenses are
deductible, and guide you through any other deductions and credits you
have coming.
