Hi Target Corp OT lawsuit, paid $16.00 in non-wages, but put $16 in 1099Misc on both box 3 and box 7. I think it's wrong, and should be either 3 or 7, not both. Thoughts?

[KFreeNow]

Turbo Tax then reports $32 in 1099 income (and $32 is included in gross income). I properly answered the question that it was a lawsuit settlement. 

[ToddL · Accepted solution]

You can "back-out" the duplicate income by making an offsetting entry in Line 21, Other Income of Form 1040. This will keep the 1099-MISC intact for purposes of the IRS matching it to your return.

To enter the "expense":

• Go to Less Common Income, Miscellaneous Income and Other reportable income (or enter "other reportable income" in the Search Box and Select "Jump to other reportable income")
• Continue to the screen "Other Taxable Income". Enter the description as "Cost of Lawsuit Income" and the amount as a negative number. These are NOT wages.

A corresponding negative amount will be entered, and line 21 will be zero. See the attached screenshot example (different descriptions, but still offsetting).