The fact that the lawsuit or legal award was reported on Form 1099-NEC may or may not be correct. The real question is whether this is to represent money that was earned or from work (you indicated it was not on your screens shown).
- If the award was for work performed than it would be reported on Schedule C and self employment tax would be included with your personal income tax (Schedule C would be part of your return and this form is associated with that income).
- If the award was not for work, but for other reasons, then it would not be subject to self employment tax, only your personal income tax. In this situation it should have been reported on Form 1099-MISC. You can report it as follows (delete the 1099-NEC entry, keep the form and the lawsuit settlement documents).
- Go to the Wages and Income section of TurboTax
- Scroll to Less Common Income > Select Miscellaneous Income, 1099-A, 1099-C
- Select Other reportable Income > Enter a description (Legal Settlement) and the amount
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