How do I claim non taxable income? Specifically in Turbo Tax.

What type of settlement did you receive?

Per IRS: The general rule regarding taxability of amounts received from settlement of lawsuits and other legal remedies is Internal Revenue Code (IRC) Section 61. This section states all income is taxable from whatever source derived, unless exempted by another section of the code.

For example, Physical injury or sickness settlements (dog bites, mesothelioma, etc.) are nontaxable and don't need to be reported unless you deducted medical expenses related to the injury on a previous tax return and you received a tax benefit from the deduction. In that case, report the medical expenses related to the incident as miscellaneous (other) income

To report previously deducted medical expenses related to physical injury or illness:

If you received a 1099-MISC:

1. Sign in to TurboTax and open or continue your return
2. Search for 1099-misc and select the Jump to link
3. If you're asked Did you get a 1099-MISC?, answer Yes
   1. If you've already entered a 1099-MISC, select Add Another 1099-MISC
4. Enter the information from your 1099-MISC and select Continue
5. On the Describe the reason for this 1099-MISC screen,
   enter lawsuit settlement and select Continue
6. On the Does one of these uncommon situations apply? screen, select This was money from a lawsuit settlement and then answer the back wages question before selecting Continue

If you didn’t receive a 1099-MISC, follow these steps to report the income:

1. Sign in to TurboTax and open or continue your return
2. Search for lawsuit settlement and select the Jump to link
3. Answer Yes to the question Any Other Taxable Income?
   1. If you've already entered miscellaneous income, select Add Another Miscellaneous Income Item
4. Enter a brief description and the amount you received and select Continue

For more information: Are legal settlements taxable?