1099-misc box 10 help

Forum|Forum|3 years ago
February 27, 2023
1 reply
3 views

I was the head of a representative action lawsuit filed against my former employer. My lawsuit agreement states I would receive a gross payment in the form of a W2 and a payment designated as interest and penalties to be reported on a 1099. I received a 1099-misc with ONLY box 10 filled out and the amount I received within that box.

1) When it asks how much is taxable what part is taxable? Are interest and penalties paid to me but reported within box 10 as gross proceeds paid to an attorney taxable?

2) Turbotax asks me to create a schedule C but this is not self-employment so do I need the schedule C form?

3) Do I enter all of box 10 is taxable since I received the entirety and then just disregard the turbotax program asking me to review and add schedule C and file as is?

4) If I enter it as all of box 10 is taxable then it does not change my refund amount is that normal/okay?

TurboTax Deluxe Online

PatriciaV

Level 15

Legal settlements are taxable income, including interest & penalties, so enter the entire amount from Box 10.

Enter this 1099-MISC as follows:

Sign in to TurboTax and open or continue your return.
Search for 1099-misc and select the Jump to link.
If you're asked Did you get a 1099-MISC?, answer Yes.
1. If you've already entered a 1099-MISC, select Add Another 1099-MISC.
Enter the information from your 1099-MISC and select Continue.
On the Describe the reason for this 1099-MISC screen,
enter lawsuit settlement and select Continue.
On the Does one of these uncommon situations apply? screen, select This was money from a lawsuit settlement and then answer the back wages question before selecting Continue.

The amount will be reported as Other Income on line 8 of Schedule 1 (Form 1040). You do not need to file Schedule C.

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momof3vs1Author

Level 2

I've entered the 1099-misc and all it is asking is which part is taxable. It does not ask me a reason and then under review it says I need to choose the schedule c to report it to. I'm not sure if I just need to file in person or what.

AliciaP1

Level 13

You may not have answered one of the questions according to the steps outlined by @PatriciaV before you posted here. You can delete your 1099-MISC entry, then re-enter it following her steps.

To delete a specific form in TurboTax Online you can follow these steps:

Within your return, click on Tax Tools in the black menu on the left side of the screen.
Click on Tools.
Click on Delete a Form.
Scroll down to your form and click Delete.
Under Federal in the black menu bar click Wages & Income to get back into your tax returns.
Proceed entering/reviewing your return.

To do this in TurboTax Desktop you can follow these steps:

Within your return, click on the Forms icon in the upper right of the screen to switch to Forms mode.
Scroll down in the menu bar on the left and select your form.
Click the Delete Form button at the bottom left of the preview screen.
Confirm the deletion then click the Step-by-Step icon in the upper right of the screen.
Proceed entering/reviewing your return.

@momof3vs1

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