1099- NEC Issues

[brianinmaine]

I am currently doing my taxes and I have received a 1099-NEC from a class action lawsuit settlement.  The Settlement was from Apple's Small App Developer fund.  I have information in Box 1 only (Nonemployee compensation)

This was the requirement for the lawsuit

1. Was sold for a non-zero price;
2. Was sold via Apple’s iOS App Store between 2015 and 2021; and
3. Earned, together with any other iOS applications or in-app products (including subscriptions) sold through all of your associated developer accounts, proceeds equal to or less than $1,000,000.00 through the App Store U.S. storefront in every calendar year from 2015 to 2021 in which you had a developer account.

When I go through the process to enter the 1099-nec in TurboTax, I am selecting

1. This money was from a lawsuit settlement

2. No for the question of "was any part of the lawsuit settlement for back wages"

When I do this it says that I am Missing Info: One of you 1099-nec forms doesn't include enough info for us to know where to report the income on your return.  We recommend you go back and edit the following form, answering all the questions so we can link it to the right activity.

I have answered all the questions and I have answered them the way I believe they should be.  Any help is appreciated as I am not sure where to go with this.

[MonikaK1]

Go back to Wages & Income, then select the section where you entered this 1099-NEC to review your entries. The program is looking to associate the self-employment income with a particular self-employment activity. 

If it fits with a Schedule C self-employed activity that you have already set up in TurboTax, you can delete the previous entry and enter the 1099-NEC in the income section of that Schedule C activity. 

If it is a separate activity not already set up as a business, you can go to Self Employment, click Start, and then click "Add another line of work" and enter it there.

See this article for more information on filing returns with Form 1099-NEC.

[brianinmaine]

But I am not self employed.  This is from a class action lawsuit.  I had developed apps 10 years ago and this payment was from a class action lawsuit based on the criteria in the original post.  I no longer do this work.  

[MonikaK1]

Thank you for the clarification.

See this IRS article:

If you're not an employee of the payer, and you're not in a self-employed trade or business, you should report the income on line 8j of Schedule 1 (Form 1040), Additional Income and Adjustments to IncomePDF and any allowable expenses on Schedule A (Form 1040), Itemized Deductions. Refer to Not for Profit Activities in Chapter 1 of Publication 535, Business Expenses for allowable nonbusiness expenses. 

In TurboTax Online, in order to report income so that it appears on line 8 of Schedule 1:

1. Go to Wages & Income
2. go to Less Common Income
3. Select Miscellaneous Income
4. Select Other Reportable Income - this is where punitive damages from lawsuit settlements and other reportable income is entered.

The IRS may send you a notice regarding a missing information return if the amount isn't entered as a Form 1099-NEC. The disposition would depend on the individual facts and circumstances.