Is a lump sum settlement for damages due to a whistleblower/retaliation case taxable?

[Anon11]

My spouse was involved in a federal whistleblower/retaliation case. The OIG found in his favor and mediated a lump sum settlement for damages. We specifically asked for it to be referred to as a lump sum so that we wouldn't have to repay the unemployment compensation he received during that time. We never received a 1099 and the income was not reported on his W2. Is this amount taxable?

[KrisD]

Yes, only payments made as part of a physical injury or sickness settlement is not taxed. 

To report:

Sign in to TurboTax and select the Take me to my return button on the main screen.

Type “lawsuit settlement” in the Search box and then select the “Jump to” link.

Answer Yes to the question Any Other Taxable Income?

Enter a brief description and the amount you received and click Continue.

https://ttlc.intuit.com/replies/4787698