I got a 1099-MISC from my mortgage lender about a credit to the balance of my mortgage loan as a result in a class action lawsuit. Do I have to pay taxes on this on this

[jeffd48]

The settlement was reached in 2015, but credits to the payee's mortgage loans happened in 2016.

[DianeW]

Yes.  If you deducted mortgage interest fees in an earlier year then the refunded amount must be reported as a recovery of a previous deduction used to reduce income.  Even though it was placed in escrow in the new mortgage it was used for your payments of insurance or property taxes or something else.

If you never deducted the fees, because you did not use them on itemized deductions, you don't have to report the refund.

If you decide you must report the income use the steps here to include the income.

For TurboTax Desktop use these steps:

1. Choose the Federal Taxes tab
2. Wages & Income
3. Scroll to Less Common Income
4. Select Reimbursed Deductions from a Prior Year
5. Select Other itemized deductions
6. Enter the amount (image attached)