Tax implications of settlements and judgments states: The key question to ask is: "What was the settlement (and its corresponding payments) intended to replace?"
If the lawsuit was in regards to taxable income, the lawsuit proceeds would be taxable income.
Yes, the shift from Ameritrade to Schwab created issues since not all information carried over.
A lawsuit settlement should have sent you a 1099-MISC with the income in box 3. Follow these steps:
- Log in to your return.
- Go to income
- Scroll down to Other Common Income
- Select Income from 1099-MISC
- Edit/ Start/ Revisit
- Enter income -the income should be in box 3,
- Enter tax if any withheld in box 4
- Continue
- Describe the reason -
- continue
- None of these apply
- Continue
- Did this involve main job?
- No
- Continue
- How often do you get?
- Got in 2024
- Continue
- Intent to earn money?
- No
- Continue
- Do you have another?
- No
- Continue
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