Are settlement amounts taxable ?

[mn301]

Hi,

   Are amounts received from settlements such as Facebook privacy and Milan et al. v. Clif Bar & Co(to name a few) taxable? Amounts received were less than $50 and there was no 1099-MISC or 1099-INT received.

Thanks in advance and regards 

[MaryK4]

Yes, amounts from settlements are generally considered taxable income by the IRS. Even without a 1099-MISC or 1099-INT, you are required to report this income, regardless of the amount. These payments are typically treated as taxable "other income". 

1. Under Less Common Income select Miscellaneous Income, 1099-A, 1099-C 
2. On the Let's Work on Any Miscellaneous Income, Start Other Reportable Income
3. On the Any other Taxable income? page, select Yes
4. On the next page, click on the Add button
5. Enter the information on the Other taxable income
    

[mn301]

Thanks. I see. For Facebook settlement, I read somewhere that only interest is taxable. Is that not the case?

Thanks again

[Karis_F]

As MaryK4 said, settlements (including a settlement from Facebook) is considered taxable income.

See this IRS article, which states that IRC Sec 61 considers settlements from any source includable in gross income (i.e., taxable) unless there is a specific exception.