1099 NEC - non taxable lawsuit settlement

[Jc168]

That’s not the problem it’s saying I’m missing information 

[MonikaK1]

Form 1099-NEC is generally intended to be used for nonemployee compensation that is earned by a contractor or other self-employed individual. If you received a payment that was reported on a Form 1099-NEC, but you didn't receive the income for work as self-employed on an ongoing basis, you can enter it in TurboTax and identify the reason for the payment:

• In Wages and Income, select Other Common Income and See More
• Select Form 1099-NEC
• Answer the questions that appear, and enter a description of the reason for the payment
• At the screen, "Does one of these uncommon situations apply?", select "This was a lawsuit settlement" if that is the best choice, or enter that it was from a one-time activity (so that it doesn't incorrectly get identified as self-employment income).
• Answer the question regarding whether any of the payment was for back wages

See this thread for another discussion of this topic.

If following these instructions doesn't resolve the issue, please provide more information as to the message you are receiving.

[Jc168]

Yes then it said missing info but I hadn’t missed any questions 

[AnnetteB6]

Instead of entering the actual Form 1099-NEC, try entering just the income amount so that it is included as part of the tax return.  Keep the Form 1099-NEC in your tax records in the event that the IRS has any questions.  

Use these steps:

1. Go to the Federal > Wages & Income section
2. Scroll to the bottom to find Less Common Income 
3. Scroll to find Miscellaneous Income, 1099-A, 1099-C
4. Scroll to the bottom to find Other Reportable Income 
5. Enter a description for the income on the Form 1099-NEC and the amount of income reported

@Jc168 

[MnMnMarin]

I was a Class Representative in a class action lawsuit, I received an Incentive Award for being a Class Rep and a 1099-NEC for the amount paid.  I also was paid for commissions owed and that was reported on a W2. Two questions:

(1) I can't find anything in IRS publications as the whether or not an Incentive Award is taxable Income, can someone point me to IRS guidance? 

(2) I currently answered the "Do any of these uncommon situations apply" wizard, checked "money from a Lawsuit Settlement" and  "No" to it being back wages.  TT is telling me that information is missing even though I've answered all the questions.  How do I resolve this error?

@SharonD007

[DavidD66]

The incentive award is compensation and is taxable.  You're not going to find something that says it is taxable, because that's not how things work.  Basically everything is taxable, unless there is a law or a regulation that says it isn't.  The payment was for your time and efforts.  It is taxable.

I would indicate that the payment was NOT money from a lawsuit settlement.  It is compensation for being a Class Rep, not damages or punitive damages.  

[Jc168]

I had the same problem I ended up switching to Jackson Hewitt online 

[marino949-gmail-]

Trying this but can not enter a negative number. 

[DawnC]

Do you have a 1099-NEC or 1099-MISC - what is it for?   You are commenting on an old and long thread, so unsure of what exactly your issue is..  @marino949-gmail- 

If it is a 1099-misc settlement not employment related, answer YES to the back wages question and enter $0 as the amount of back wages.