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In general, any settlement you received for personal or physical injury or sickness is NOT taxable.
Most other [legal] settlements, such as for back pay and punitive damages, are taxable.
In the case of property (like your car) , if the settlement merely restores your original value, it’s not taxable, but if it enriches you beyond where you were before, it is taxable.
This is how you should enter it:
In general, any settlement you received for personal or physical injury or sickness is NOT taxable.
Most other [legal] settlements, such as for back pay and punitive damages, are taxable.
In the case of property (like your car) , if the settlement merely restores your original value, it’s not taxable, but if it enriches you beyond where you were before, it is taxable.
This is how you should enter it:
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