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Get your taxes done using TurboTax
You cannot report a Form 1099-NEC without filing a Schedule C. Form 1099-NEC is for Non-Employee Compensation, which must be reported on Schedule C. The problem is if you report the proceeds from your legal settlement on Schedule C, it will be subject to self-employment tax. Your payment should have been reported on Form 1099-MISC. I suggest you report the proceeds on Schedule C, but add an expense to Schedule for the same amount as the payment. This will zero out your Schedule C and result in no self-employment tax being owed. You still need to report the settlement as income. To do so:
- Sign in to TurboTax and open or continue your return.
- Search for lawsuit settlement and select the Jump to link.
- Answer Yes to the question Any Other Taxable Income?
- If you've already entered miscellaneous income, select Add Another Miscellaneous Income Item.
- Enter a brief description and the amount you received and select Continue.
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‎February 11, 2024
8:21 PM