Settlement Agreement for Discrimination from Federal Agency- medical Expenses

[TammyLL]

I received a settlement agreement due to an employment discrimination claim where the Agency failed to provide insurance coverage for a disability.  The payment was a lump sum for reimbursement for medical expenses, interest on the 20+ year old claim, and damages for emotional harm.  Nothing breaks down the amount allocated for each as it was a lump sum.  Is all of it taxable?  Can I deduct some of it?   If so, where do I enter it on TurboTax?  Thank you!

[MaryK4]

The medical expenses reimbursement is not taxable income, the interest is usually are taxable, and the damages for emotional harm are not taxable IF attributable to a personal physical injury or physical sickness.  Because it was a discrimination case,  any legal fees related to unlawful discrimination claims should be included on Form 1040 as a deduction.  

For the TurboTax entry, see Where do I enter an award from a taxable legal settlement? 

To enter your qualifying legal fees from an employment discrimination suit in TurboTax Online,

1. Go to Wages & Income
2. Scroll down to Less Common Income, 
3. Next to Miscellaneous Income,  
4. Select  Other reportable income 
5. Description "Qualifying Legal Fees," and
6. Enter the amount as a negative number.

The deduction will appear as an “above the line” deduction and will be deducted from your gross income.