Form 1099-NEC is generally intended to be used for nonemployee compensation that is earned by a contractor or other self-employed individual. If you received a payment that was reported on a Form 1099-NEC, but you didn't receive the income for work as self-employed on an ongoing basis, you can enter it in TurboTax and identify the reason for the payment:
- In Wages and Income, select Other Common Income and See More
- Select Form 1099-NEC
- Answer the questions that appear, and enter a description of the reason for the payment
- At the screen, "Does one of these uncommon situations apply?", select "This was a lawsuit settlement" if that is the best choice, or enter that it was from a one-time activity (so that it doesn't incorrectly get identified as self-employment income).
- Answer the question regarding whether any of the payment was for back wages
See this thread for another discussion of this topic.
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