I received both a 1099 NEC and a 1099 MISC from the same employer for a lawsuit settlement for back wages. When I tried to enter the 1099 NEC in TurboTax Deluxe and checked the box for a lawsuit settlement and entered the amount, it wanted me to fill out a Schedule C which does not have means of saying it's for a settlement. How do I resolve this issue?
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Entry depends on whether this settlement was for wages or something else. Since the income is issued on Form 1099-NEC, and you indicated you do have back wages included, my instruction will assume it was for back pay or wages.
Any part of the 1099-NEC that is for back wages and allowed to be issued in that manner must be included as income on Schedule C.
Social security and medicare taxes are required to be paid on compensation, i.e., this income. based on the document received (Form 1099-NEC). This is assumed due to the way it was reported. If this was not back wages, you should request a corrected form.
You can use these steps to report your settlement from a lawsuit. The steps will report the lawsuit 1099-NEC adding any taxes.
Please update here if you need further assistance.
The amount that was on the Form 1099-MISC should be entered differently as follows because self employment taxes are not required.
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