Legal settlements that are taxable (including previously-deducted medical expenses related to physical injury or illness) are entered as miscellaneous (other) income.
If you received a 1099-MISC:
- Sign in to TurboTax and open or continue your return.
- Search for 1099-misc and select the Jump to link.
- If you're asked Did you get a 1099-MISC?, answer Yes.
- If you've already entered a 1099-MISC, select Add Another 1099-MISC.
- Input the information from your 1099-MISC and select Continue.
- On the Describe the reason for this 1099-MISC screen,
type in lawsuit settlement and select Continue.
- On the Does one of these uncommon situations apply? screen, select This was money from a lawsuit settlement and then answer the back wages question before selecting Continue.
