Hi, please help; I also received a settlement from ex-employer. Two checks came since they allocated equal amounts to a W-2, and a 1099-MISC specifying that it was Non-Wages portion of the settlement.
In entering the 1099-MISC, if I checked YES to "Was any part of the lawsuit settlement for back wages?" and entered the dollar amount, TurboTax would not calculate a Self-employment tax. If I checked NO to the question I would see a Self-employment tax added on.
My question is that, yes, the 1099-MISC should be taxed as income, but should I have to pay self-employment tax in addition? What would be the IRS-accepted answer to the TurboTax question "Was any part of the lawsuit settlement for back wages?" Thank you so much for taking the time to read and reply.
