How do I report court settlement amount?

[surfbird]

how do i report a settlement amount for myself and wife from court case?

[SusanY1 · Accepted solution]

Where this is entered can depend on the type of settlement.  Certain types of settlements may not be required to be reported on your tax return.  

Can you please clarify the nature of the settlement received? 

[surfbird]

My reply was another question!

My answer is "Reward for court case of tainted ground water".

[KrisD15]

• Wages & Income
• Less Common Income
• Miscellaneous Income, 1099-A, 1099-C
• START
• Other reportable income
• START

Whether the income is taxable/reported depends on the "Type" of award which is why your question was answered with a question.

If for injury, non-taxable, not reported.

If for penalty (Punitive) then it IS taxable and reported.

The award could be a combination of both, in which case the amount reported would be the award less the amount for personal injury. 

According to the IRS:

“However, the facts and circumstances surrounding each settlement payment must be considered to determine the purpose for which the money was received because not all amounts received from a settlement are exempt from taxes. The key question to ask is: "What was the settlement (and its corresponding payments) intended to replace?"