Class-Action Lawsuit Settlement 1099-MISC Box 3 (C...
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Returning Member

Class-Action Lawsuit Settlement 1099-MISC Box 3 (Countable Source of Income for CoveredCA)

I am trying to find out if my Class-Action Lawsuit Settlement money is considered a COUNTABLE source of Income with regards to CoveredCA Health Insurance subsidies. The only information I could find related to Settlement money is for LOST WAGES or Personal Injury, both of which are NOT the type of settlement I received.

 

I received a 1099-MISC, Other Income (Box 3) $xx,xxx.00 for a Class-Action Lawsuit Settlement.

Federal Income Tax Withheld (Box 4) $0.00

 

I know I owe taxes on this Income, but my question is whether this is a COUNTABLE SOURCE of Income for CoveredCA 2020 Health Insurance Premium Assistance Subsidy?

 

If this Income from a Lawsuit Settlement COUNTS, then I exceed the 400% and have to pay back all the subsidy money.

 

IF, your MAGI exceeds 400% of the federal poverty level - because you forgot to include the INCOME – when you file your 2020 tax return, you will have to repay ALL of the federal Advance Premium Tax Credits you received during the year.

 

I noticed that FORM 3849 (Health Insurance Premium Assistance Subsidy) is still be worked on at TurboTax and will be ready on 2/11/2021. So I am Praying that Class-Action Lawsuit Settlements 1099-MISC are not COUNTABLE toward my subsidy money.

3 Replies
Employee Tax Expert

Class-Action Lawsuit Settlement 1099-MISC Box 3 (Countable Source of Income for CoveredCA)

The class action settlement is taxable and is included in your Adjusted Gross Income (AGI).

 

CoveredCA defines income as your adjusted gross income (AGI) from your most recent federal income tax return, located on line 8b on the Form 1040.

 

Your class action settlement counts as income for CoveredCA.

 

Please read this CoveredCA document for more information.

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Returning Member

Class-Action Lawsuit Settlement 1099-MISC Box 3 (Countable Source of Income for CoveredCA)

 

Updated Countable Sources of Income Covered California 2020

https://insuremekevin.com/updated-countable-sources-of-income-covered-california-2020/

Employee Tax Expert

Class-Action Lawsuit Settlement 1099-MISC Box 3 (Countable Source of Income for CoveredCA)

According to Covered California:  "Any financial help you get is based on what you expect your household income will be for the coverage year, not last year’s income."  The income from the lawsuit was presumably in 2020 and will not affect your 2021 income, which is what your coverage is based on.

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