Yes. You can treat it as Miscellaneous Income. If you received an interest component when you negotiated your payment, then that will also be subject to tax (you should receive a 1099-INT form).
Enter this Miscellaneous Income:
- Click on Federal tab.
- Click on Income & expenses.
- Scroll down to Less Common Income.
- Click on Start or Update button Miscellaneous Income, 1099-A, 1099-C
- On the next screen (Let's Work on Any Miscellaneous Income), click the Start or Update button for Other reportable income.
- Did you receive any other taxable income. Click Yes.
- Other Taxable Income, enter a description and the amount. Click Continue.
- Click Done.
The income will be reported on Schedule 1 line 8 (z) with the description that you entered.
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