Where do we enter compensatory lawsuit settlement check in TurboTax so that it will show as non-taxable? Attorney says its non-taxable, but should be reported. No 1099.

Lawsuit was with a home contractor who refused to honor a warranty. Received one check in 2017 and will receive two more in 2018. All settlement money will go to repair the house. There are no punitive damages. We did not receive a 1099 for the 2017 check.

We have used TurboTax since 1994, so we are familiar with the program. We just can't find where to enter this settlement so that it shows as as non-taxable.

1386

Level 2

Jun 3, 2019 5:01:25 PM

Your settlement should be reported as "Other Income" on your return. To enter this on your return, follow the instructions below:

Choose the Federal return and the Wages & Income tab
Scroll down to Less Common Income and Show more.
Choose Miscellaneous Income, 1099-A, 1099-C.
Choose Other Reportable Income and say Yes.
The screen says "Do not enter income reported on Form 1099-MISC"; this is where you will enter the description "Compensatory settlement" the amount you received, and who received it, if necessary.

To zero it out, you will do the same thing, but enter the description "Settlement not taxable" (as instructed by your attorney) and the amount as a negative number.

A corresponding negative amount will be entered, and line 21 will be zero.

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Where do we enter compensatory lawsuit settlement check in TurboTax so that it will show as non-taxable? Attorney says its non-taxable, but should be reported. No 1099.