You are correct; Lawsuit settlement income in box 3 on a 1099-Misc should not generate a schedule C. First, revisit the "Self-employment" topic and delete the business and income there that doesn't belong in order to start over.
- Click "Income & Expenses" tab
- Scroll down to "Other Common Income"
- "Show More"
- "Start/revisit" the 1099-Misc" topic
- Enter the form information
- Enter a description
- On the page titled "Does one of these uncommon situations apply?" Select "This Money was from a Lawsuit Settlement"
- Answer the "Back wages" question at the bottom of the page.
- Complete the interview questions.
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