Where to enter non-taxable medical settlement when preparing return

BookerFin2025
BookerFin2025 Member Posts: 2 Newcomer
in Situation & Life Changes

Medical settlements are non taxable. Where /how are they entered? The settlement is the money that was used to live because injury resulted in disability and inability to earn income. The IRS needs to see how I afforded to live for the year. I lived off the settlement. How and where do I show this and enter the settlement amounts in preparing my return.

Best Answer

  • MatthewD
    MatthewD FreeTaxUSA Team Posts: 597
    Answer ✓

    Hi BookerFin2025,

    When you have a nontaxable settlement that is exempt from taxation, it is NOT reported anywhere on your tax return. A tax return only reports taxable income. The IRS's job is to collect taxes.

    For more information see this IRS FAQ on Tax implications of settlements and judgments.

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