I just received word from the IRS that I owe them over $4000 from my 2014 return that I filed through TurboTax. I received $30,000 on a 1099-MISC which was settlement payment on a breach of contract lawsuit with my former employer. My former employer entered in Box 7. I filled this out on TurboTax and was never directed to complete the Self-employment tax portion after checking it was from a lawsuit settlement. IRS is now saying that I need to pay the self-employment tax and return the refund I received. How can I remedy this situation? Why wasn't I informed when completing TurboTax and entering that information that I should do self-employment tax. Should I fight the IRS and provide information as to why I shouldn't pay this?
