Re: Class action lawsuit settlement check recording category?

On 2/16/2023 4:59 PM, Rocket J Squirrel wrote:
> I created a category named "Legal Settlement" for this. You can name it whatever you like. I have never been clear on whether this is taxable, but if it were, I'd assign the tax line item "Form 1040:Other income, misc." The amounts are always too small to affect the bottom line of my 1040 anyway.
> 

Thanks.

The description of the settlement in my case indicates the award was 
punitive.  IRS states "IRC Section 104(a)(2) permits a taxpayer to 
exclude from gross income "the amount of any damages (other than 
punitive damages) received (whether by suit or agreement and whether as 
lump sums or as periodic payments) on account of personal injuries or 
physical sickness"

Note the phrase "other than punitive damages".  So I believe it is 
indeed taxable.  And you're right, I'd rather include my measly $35 that 
make some erroneous assumption it's not taxable and deal with the IRS 
should I ever get audited over this sort of thing...especially since I 
think it IS.

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Regards -

- Andrew