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It depends on whether or not you received a 1099 or not. Please see this LINK.
What type of settlement is it? Why do you feel it is nontaxable? Pub 4345 can give guidance.
The general rule of taxability for amounts received from the settlement of lawsuits and other legal remedies is Internal Revenue Code (IRC) Section 61 that states all income is taxable from whatever source derived unless exempted by another section of the code. IRC Section 104 provides an exclusion from taxable income with respect to lawsuits, settlements, and awards.
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?
Tax Implications of Settlements
Hi I received a 1090-MISC and the settlement was for personal injury see my lawyer's reply below:
If you receive a 1099-Misc for non taxable income, you simply do not enter it into TurboTax.
wow easy enough! thanks so much!
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