Indian tribe distributions

[ssoperator]

  My wife and son both receive a once-a-year distribution from their indian tribe, how would I report this?

[PattiF]

To clarify this, what state do you live in and on what form, if any, is the distribution reported?

[ssoperator]

 We live in Oklahoma, but the tribe's reservation is in Red Lake, Minnesota. The payments were not recorded on any 1099 forms. They just received $500 checks, from the tribe's. The money comes from a yearly  settlement the federal government pays to the tribe.

[PattiF]

This is not counted as income. 

[ssoperator]

  Ok, so I don't have to report it anywhere in TT?

[ssoperator]

Also, he got a refund from his Tulsa Community College Bankmobile Vibe account of $28.53, and inheritance of a life insurance payout, from my wife's uncle (who lived on the same reservation) which was being held in a trust account until he was 18 (which he turned in 2020). I know the interest on this account is taxable and have already reported it, but what about the principal?

[PattiF · Accepted solution]

No, you so not have to report this anywhere in TurboTax.

[ToddL99]

The annual payments ($500) are probably not taxable.  As proceeds from a settlement with the federal government, they are likely on account of harm (damages) done to the tribe and its members. Payments for damages are exempt from tax. 

A "refund" is a return of your own money, not income. Unless he claimed the original payment as a business expense, he does not have to report the "refund" as income.

Life insurance proceeds (the principal) are not taxable and are not reported on a tax return.

Interest income from the trust holding those insurance proceeds is, as you are aware, taxable. 

[ssoperator]

 Ok, thanks a lot!

[ssoperator]

Ok, thank you very much!

[PattiF]

You are welcome!