How do I input Insurance Settlment amount in Income section when Filing?
I recieved a lump sum from an insurance settlement.
I don't see an option for Insurance settlements in the subcategories within the Income tab. I believe I still have to file the amount in the state of Texas.
Any help would be appreciated.
Answers
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Hi OrsonSc0ttCard,
Before entering any information about your settlement, it is important to know what amount, if any, is taxable. Not at all settlement amounts are taxable, although many can be. For instance, an insurance settlement from a homeowner's policy is often not taxable. The insurance payout is to 'make you whole,' as if the cause of the settlement never happened.
Please read through IRS Publication 4345 first.
Settlement amounts are frequently reported on Form 1099-MISC, but some are not. If not, taxable amounts are reported as Other Income in our software.
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This was for a pedestrian car accident.
I did not take an itemized deduction for medical expenses.
The amount I received was only for pain and suffering. I have not acquired the amount to compensate for medical expenses yet.
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According to IRS publication 4345:
"If you receive a settlement for personal physical injuries or physical sickness and did not take an
itemized deduction for medical expenses related to the injury or sickness in prior years, the full
amount is non-taxable. Do not include the settlement proceeds in your income.The proceeds you receive for emotional distress or mental anguish attributable to a personal physical
injury or physical sickness are treated the same as proceeds received for Personal physical injuries or
physical sickness above."Meaning, if that applies to the settlement amount you received, then you generally would not need to include it in your income at all.
