How do I report court settlement amount?

Forum|Forum|2 years ago
February 17, 2024
1 reply
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how do i report a settlement amount for myself and wife from court case?

TurboTax Deluxe Online

Best answer by SusanY1

Where this is entered can depend on the type of settlement. Certain types of settlements may not be required to be reported on your tax return.

Can you please clarify the nature of the settlement received?

SusanY1Answer

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surfbirdAuthor

My reply was another question!

My answer is "Reward for court case of tainted ground water".

KrisD15

Wages & Income
Less Common Income
Miscellaneous Income, 1099-A, 1099-C
START
Other reportable income
START

Whether the income is taxable/reported depends on the "Type" of award which is why your question was answered with a question.

If for injury, non-taxable, not reported.

If for penalty (Punitive) then it IS taxable and reported.

The award could be a combination of both, in which case the amount reported would be the award less the amount for personal injury.

According to the IRS:

“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?"

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