When entering a Form 1099-MISC for an amount paid for a reason such as you described, you can identify that it was not income from working so that it doesn't get misclassified as self-employment income:
- Select Income from Form 1099-MISC under Wages and Income.
- Enter the payer information and dollar amount
- Enter a description for the payment
- When asked about Uncommon Reasons, select that none apply or select one that adequately explains the reason
- When asked about the frequency of payment, select received in 2023
- When asked "Did (description) involve an intent to earn money?" answer No (that is, it is not earned income and therefore not subject to self-employment tax)
If you already entered this Form 1099-MISC in another section, delete that entry.
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