Insurance proceeds only need to be entered net of the expenses that they are reimbursing.
Taxable proceeds include replacement for lost revenue and items that would have been taxed originally. Those would just be entered as though you had received the original income.
Compensation for punitive damages or emotional distress can be taxable. If so they are entered as "other Income".
Proceeds from property damage don't have to be entered at all unless there is a net loss or gain.
So if you received insurance proceeds of $10,000 for a new roof then you would figure out what you spent on the new roof. If it was $10,000 then you would enter nothing because the net result is zero. If you spent $12,000 then you would enter a $2,000 capitalized expense for a new roof. If you only spent $8,000 then you would enter $2,000 in income from insurance proceeds.
If you receive a 1099 for the insurance proceeds then enter it as a 1099 and enter the corresponding expenses to reduce or eliminate the taxable income.
@bpw43
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