Class Action Settlement

[Blair55]

Do I have to report a Class Action settlement from a data breach if no 1099 is sent to me?  $50 amount.

[LindaS5247 · Accepted solution]

In general, a settlement compensating you for personal injury is not considered taxable income. But if the settlement includes an amount for non-physical injuries, emotional abuse or for punitive damages, that portion would be subject to income tax.

The legal settlement would be reported as "Other Taxable Income."

You may or may not have received a 1099-Misc. Regardless, this is how you would enter it into TurboTax:

1. Click on Federal Taxes 
2. Wages & Income > I'll choose what I work on.
3. Other Common Income section, click Show more
4. Form 1099-MISC, click on the Start/Update
    
5. Did you get a 1099-MISC?, click Yes
6. Let's get the info from your 1099-MISC, box 3 Other Income, click Continue
    
7. Describe the reason for this 1099-MISC, click Continue
8. Select This was money from a lawsuit settlement on the Does one of these uncommon situations apply? screen and then answer the back wages question before clicking Continue.
    

If you did not receive a Form 1099-MISC enter your information as follows:

1. Sign in to TurboTax and open or continue your return.
2. Search for lawsuit settlement and select the Jump to link.
3. Answer Yes to the question Any Other Taxable Income?
   • If you've already entered miscellaneous income, select Add Another Miscellaneous Income Item.
4. Enter a brief description and the amount you received and select Continue.

Please click here for where to enter an award from a legal settlement.

Please click here for additional information on settlements.

Click here for additional information on the taxability of legal settlements.

Please click here for additional information on Form 1099-Misc.