If not wages, then what is it for? Settlement income is taxable according to the type of income it represents. Back wages or lost wages are taxed as if they were wages and are subject to social security and Medicare Tax. A non-wage settlement (such as, reimbursement for required clothing and protective equipment that they should have paid for) would be taxable as miscellaneous income. If the settlement includes interest, that portion is taxable as interest. If the settlement is for physical injury or property damage, it will generally not be taxable at all, unless it is more than your loss. (For example, if a company truck damaged your car in the parking lot and the company paid your deductible, that's not taxable. If they paid you $2000 but it only cost you $1800 to fix the damage, then $200 is deductible.)
What tax you pay and how you report it on turbotax depends on what the settlement was actually for.
