You shouldl simply request a corrected document to show the settlement. This item was reported to the IRS as such and will therefore be shown as income at IRS.
Take a look at your form. A 1099-NEC having an amount in box 1 and 1099-MISC with an amount in boxes 1, 5, 9, or 10 is a good indicator that it's self-employment income.
Whether you’re a sole proprietor, an independent contractor, a consultant or a freelancer, you’re probably getting some or all of your income reported on a 1099-NEC, 1099-MISC or 1099-K. You have flexibility to work the way you want, but it also means the government considers you to be self-employed — or even a business.
Follow these instructions to enter a 1099-NEC and/or 1099-MISC form. After you enter the info from your form, we’ll ask you a few questions to make sure it’s for self-employment. If not, we’ll link it to the correct income section of your return.
1099-MISC unrelated to self-employment
A non-work 1099-MISC would be for things like:
- Prize money
- Lawsuit settlements
- Research studies
- Other
Here ‘s how to enter a 1099-MISC that you may have received for another reason.
After you enter the info from your form, we’ll ask you a few questions to determine what type of 1099-MISC it is and link it to the correct income section of your return.
Key Points on 1099-NEC or 1099-MISC and Other Self-Employment Income
When you’re paid this way, there’s no withholding taken out of your income, which means you’ll pay both self-employment tax as well as income tax.
A benefit of being self-employed is that it enables you to have lots of write-offs as well, so make sure to enter all your expenses. This helps you reduce the taxes you might owe or increase your refund. We’ll help you get every possible tax break you deserve.
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