@Opus17 gave you good advice a couple of posts back. I would make one modification.
Clear out any 1099-MISC entries you have for this transaction.
The Internal Revenue Service (IRS) and Social Security consider back pay awards to be wages. So that income is taxed differently.
You stated that It does mention that "25% of individual settlement amounts are for unpaid wages" but nothing more.
- Start at Wages & Income
- Scroll down to Other Common Income
- Select Form 1099-MISC
- Post the entire form exactly as it is.
- Describe the reason for this 1099-MISC = Back Wages & Other
- Does one of these uncommon situations apply?
- Select This was money from a lawsuit settlement
- A drop-down will appear - Was any part of this lawsuit for back wages? = Yes
- Enter the amount as 25% of total
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