Then it's reported incorrectly. Let me lead you through some steps but before you perform these, you may wish to delete all your previous entries reporting your 1099 MISC. Before you do this, read my instructions to see if you reported it like I suggest.
- Go to federal>wages and income>other common income>income from 1099-MISC
- Enter the 1099-MISC
- Next screen will ask you for a description of the income
- Next screen asks if any of this uncommon income applies. Say this is from a lawsuit settlement. if it asks if it was for back wages, say no.
- If this is done correctly, this should appear in Line 1Z from Schedule 1 and then transfer to line 8 on your 1040.
- Now if you said yes that this was for back wages, then the amount will appear on Line 1h on your 1040. This isn't for back wages but it's the interest for the back wages. Interest is not earned income but back wages without interest is earned income. Therein lies the difference.
Before you delete your entries as I have suggested, you might want to make that simple change to change the entry in step 4 from a yes to a no. In most instances this may work but sometimes these entries stick to the original choice even if you try to make the change. If this is the case, you may need to delete all your previous entries and enter the 1099 MISC again.
Let me know if this works.
@Rickd83
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