Taxability of a Class Action Settlement

[Tax Sleuth]

What are you supposed to do when a taxpayer has received a Court-approved Health Net class action settlement in 2016? The taxpayer did receive about $50.00 because of this settlement. According to the letter, none of the distribution was already taxed. Is this money likely taxable and should it be shown on Line 21 - Other Income on Form 1040, or am I incorrect?

[spanel]

What are you supposed to do when a taxpayer has received a Court-approved Health Net class action settlement in 2016? The taxpayer did receive about $50.00 because of this settlement. According to the letter, none of the distribution was already taxed. Is this money likely taxable and should it be shown on Line 21 - Other Income on Form 1040, or am I incorrect?

If the money was used to increase a refund (sch a or sch c)deduction, then I would.

If it was not, then its just a refund of fees paid for something.

Chris

[taxea]

Was a 1099misc issued? You need to look at the documents.

[Tax Sleuth]

To my knowledge, there was no Form 1099-MISC. The letter does not state anything about that. It sounds like it is safer to include the money as Other Income even if it does not have to be there.

[taxmom34]

if no 1099misc, is it possible the company would have determined that it was not taxable. just guessing.