turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

Where/How do I report proceeds from class action lawsuit

I am a plaintiff in a class action lawsuit against a large utility company. The courts have recently ruled against the utility company and all plaintiffs will be receiving settlement checks. The settlement will separate the proceeds between Personal Injury and Economic Injury. My understanding is that Personal Injury awards are not taxable…but that Economic Injury awards are. Is this true? Do I need to report the proceeds of this settlement check on my personal tax return and if so, where? Thank you.

3 Replies
OpeA1
Employee Tax Expert

Where/How do I report proceeds from class action lawsuit

Hello @Dave991 :

 

Settlement checks are usually attached to a 1099-misc or whatever the court system determines as the type of income. The document attached is what you need to file your tax return.  So, be careful to hold on to the check and the tax return documents that come with the settlement check.

 

Yes, personal injury awards are not taxable. This is also confirmed by looking to see if any tax documents are sent with the check.

Thank you!

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
KochuK
Employee Tax Expert

Where/How do I report proceeds from class action lawsuit

Hi Dave 991,

 

Yes, you are correct that, in general, proceeds received for physical injuries or physical illness are tax free; Other awards are taxable.

 

You should receive a Form 1099-Misc reporting any taxable amount for tax year 2022. When entering 1099 Misc into TurboTax, if you answer entry questions correctly "The money was from a lawsuit settlement", "It was not back wages,  the amount will flow to "Other Income."

 

Hope the above helps.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Where/How do I report proceeds from class action lawsuit

Thanks for the info.

Use your Intuit Account to sign in to TurboTax.
By selecting Sign in, you agree to our Terms and acknowledge our Privacy Statement.
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question

Related Content

Manage cookies