Hi, my employer went bankrupt and a firm came in and seized the assets and auctioned them off to pay employees our final check and other creditors. We received a 1099-Misc with our amount listed in Box 7. The 1099 was issued from the firm that seized and auctioned the assets, not my former employer. I am not self employed nor have I ever been, do I need to file a schedule C or is there another way of doing this?
Thanks!
Jeff
When you enter the 1099-MISC, be sure to select "This was money from a lawsuit settlement" AND "Yes" to "was any part of the lawsuit settlement for back wages"
Enter the amount from the 1099-MISC
Continue through the interview.
It is a little complicated, but the IRS needs to make adjustments for your FICA (Social Security and Medicare) tax which the employer should have withheld and paid 50% of. You will see your share (what should have been withheld) on Schedule 2 line 4.
It will not be self-employment. There will be no Schedule C.
This 1099-MISC is entered under
Wages & Income
(Scroll down past Self-Employment)
Other Common Income
Form 1099-MISC