Settlement taxable (2024)

• Not A Product Question

a week ago

As SharonD007 mentioned, legal settlements are often taxable. Non-injury settlements are considered other taxable income. Normally companies do not issue a Form 1099-MISC for payments under $600, but you should still report this income on your tax return.

If I didn't get a 1099-NEC or 1099-MISC, do I still need to report the income if it's less than $600...

@praxisknight

[Edited 3/26/24 | 11:40 AM PST]

It depends. Legal settlements are often taxable, depending on the type of settlement and would have been indicated in your settlement agreement. Non-injury settlements are considered other taxable income. You should receive a Form 1099 if your settlement is taxable. You will be taxed on the income based on the tax bracket that you fall in and the federal income tax rates.

Refer to the TurboTax articleAre legal settlements taxable? for more information.

If you receive a form 1099-MISC, follow the instructions below to enter your settlement income:

1. Sign in to your TurboTax account
2. Type1099-MISC in the search box
3. SelectJump to 1099-MISC
4. Selectyes to enter a 1099-MISCor Add another 1099-MISC
5. Enter the information and selectContinue
6. When you get to the Describe the Reason for this 1099-MISC enterLawsuit Settlementand selectContinue
7. When you get to the Does any of these uncommon situations apply? SelectThis was money from a lawsuit settlement and answer the question regarding back wages and select Continue.

For additional information, review the TurboTax help articleWhere do I enter an award from a taxable legal settlement?

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As SharonD007 mentioned, legal settlements are often taxable. Non-injury settlements are considered other taxable income. Normally companies do not issue a Form 1099-MISC for payments under $600, but you should still report this income on your tax return.

If I didn't get a 1099-NEC or 1099-MISC, do I still need to report the income if it's less than $600...

@praxisknight

[Edited 3/26/24 | 11:40 AM PST]