Do I get a QBI for a legal settlement?

[mcgibbslap]

I have a legal settlement for unpaid back wages and related damages. TurboTax says I can get a Qualified Business Income deduction for this, but I have doubts, and I can't turn it off.

[MinhT1]

A legal settlement for unpaid wages is not business income and is not eligible for the QBI deduction.

[mcgibbslap]

I didn't think so, but I don't see any way of turning it off.

[AliciaP1]

I'm assuming you received a 1099-NEC for the back wages and you did not mark the entry that it should have been reported on a W-2.  Without this designation, TurboTax thinks you are a contractor with self-employment income.

To correct your 1099-NEC entry please follow these steps in TurboTax Online:

1. Within your return in TurboTax Online search for Schedule C.
2. Click the Jump to Schedule C link in the search results.
3. If you get to a self-employment summary screen, delete the self-employment income line with the trash can icon.
4. If you get to the question Did you have any self-employment income or expenses? answer No. 
5. Click on Tax Tools on the left side of the screen.
6. Click on Delete a Form. 
7. Scroll down to your Schedule C and Schedule SE and click Delete if they are still there.
8. Search for 1099-NEC and select the Jump to link.
9. Enter your 1099-NEC according to the form you received and click Continue.
10. On the Describe the reason... screen enter "Award/Bonus"
11. Choose XXX employer reported this extra money on a 1099-NEC but it should have been reported on a W-2 and click Continue.
12. On the Filing Form 8919 screen click None of the Above (because your 1099-NEC and W-2 are not from the same company) and click Continue.
13. Continue through the interview and follow the instructions.

You will need to file Form SS-8 according to the instructions separately from your tax return.

[mcgibbslap]

Oh dear, this sounds like it's turning into some serious questions for my legal counsel. Thank you for the guidance.

[mcgibbslap]

Is filling out the SS-8 a service TurboTax can assist me with if I elect to work with a tax expert?

[JamesG1]

TurboTax Live Help would likely not be able to assist in preparing IRS Form SS-8.

Firms and workers file IRS Form SS-8 to request a determination of the status of a worker under the common law rules for purposes of federal employment taxes and income tax withholding.  Instructions are here.

Send the completed and signed Form SS-8 to:

Internal Revenue Service
Form SS-8 Determinations
P.O. Box 630
Stop 631
Holtsville, NY 11742-0630

Faxed, photocopied, or electronic versions of Form SS-8 are not acceptable for the initial request for the Form SS-8 determination. 

Do not submit Form SS-8 with your tax return as that will delay processing time.

@mcgibbslap