It's important that you enter the 1099-MISC correctly so that it's not treated like self-employment income by the program. If you've already attempted to enter it and the program even "hinted" at it being self-employment income, then you need to delete it along with the SCH C the program created first, before attempting to enter it correctly.
Under the personal income tab scroll down to Business Items and under that elect to start/update Business Income & Expenses (SCH C). If you see "anything" listed there with a delete button to the right of it, then you need to click that delete button to delete the SCH C. Once you've done that, here's how to enter your 1099-MISC so it's not treated like self-employment income by the program. It's important you enter the 1099-MISC *exactly* as printed. The legal fees are dealt with elsewhere.
Reporting 1099-MISC (box 3)
that is not self-employment income
Under the Wages & Income tab (or Personal Income tab)
scroll down to Other Common Income and elect to start/update Income from form
1099-MISC. Then click YES to indicate you have a 1099-MISC.
Enter the 1099-MISC exactly as printed, and then
Continue.
Enter the reason you got this money – be it scholarship,
bonus, streaking butt naked across the 50 yard line of the super bowl,
whatever. Then continue.
Select None of these apply, then Continue.
Select No, it didn’t involve work….. and Continue.
Select ONLY the tax year for which this specific
1099-MISC was issued. Do not select the year that you received the 1099. Select
the year for which the 1099-MISC was issued. Select no other year. Then
Continue.
Select No, it didn’t involve an intent to earn money, then
Continue.
Select NO, then Continue.
Click the DONE button, and that does it.
For the legal fees, you deal with that under the Deductions and Credits tab. Scroll down to Other Deductions & Credits and under that elect to start/update Legal Fees. When/if asked for details about the legal fees, make sure you reference " IRC Section 62(a)(20) and (21)" so that if your return is pulled for review, whoever reviews it will better understand and "hopefully" not delay any refund you may have coming.
