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kee6812
Level 1

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

 
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Accepted Solutions
LenaH
Employee Tax Expert

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

If a Schedule C continues to populate, it is important that you answer the questions that follow the entry screen for the 1099-MISC. If answered correctly, you will also be able to have this income flow to Other Income will not go to self-employment income. 

 

Please follow the instructions below:

  1. Open or continue your return, if you're not already in it.
  2. Search for 1099-misc and select the Jump-to link.
  3. Edit your 1099-MISC.
  4. Continue past the amounts already entered.
  5. Describe the reason for this 1099-MISC.
  6. Answer This Money Was From a Lawsuit Settlement on the screen Does one of these uncommon situations apply?
  7. Answer No, it was not back wages for the next question.
  8. Answer No for the question Did you have another 1099-MISC?
  9. Your 1099-MISC will flow to Other Income.

Next, please make sure to delete any Schedule C or associated self-employment forms in your return.

  1. Search for Schedule C with the magnifying glass tool on the top of the page.
  2. Select the Jump to Schedule C link in the search results.
  3. Select No to the question Did you have any self-employment income or expenses? 
  4. Click on Tools.
  5. Click on Delete a Form
  6. Scroll down to your forms and look for forms you need to remove and click Delete

@Loucarti

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36 Replies
MinhT1
Employee Tax Expert

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

If you receive a form 1099-MISC for a settlement, then you are not considered as self-employed and do not need to file a Schedule C.

 

In TurboTax, enter your form 1099-MISC and follow the interview until you arrive at the page titled Did this involve an intent to earn money?. Answer that this did not involve an intent to earn money. The amount will be reported as Miscellaneous income and will not be subject to Self-employment tax.

 

In TurboTax, there is a work-around. Although you may receive this income every year, say that you only receive the 1099-MISC only in 2020, not in previous years and not in 2021, you will then have the screen where you can say that it did not involve an intent to earn money.

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kee6812
Level 1

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

Thanks for the info! 

I started entering the info in from the 1099-misc, what seems to be triggering the schedule C is the gross attorney fees in box 10. After I enter that number, it says I need to fill out the schedule C. But since I am not self employed, I’m not sure what to enter. It looks like the schedule c has to be filed to pay taxes on box 10? Is that right? 

JeffreyR77
Expert Alumni

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

It depends.  Box 10  indicates you were paid fees as an attorney.   

 

That would indicate you were compensated for your expertise as an attorney. 

 

If this was limited to expert testimony and was an isolated one time situation where you provided this and were compensated for it you can enter your Form 1099-MISC with box 10 and not complete a Schedule C. 

 

If you provide expert testimony on a recurring or aperiodic basis, you should complete a Schedule C and can claim any ordinary and necessary expense you incur in the line of providing ad hoc legal services.

 

These could include expenses for use of an office in the home if you provide these services from home. 

 

What Are Deductible Business Expenses

Amparo Valdez
New Member

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

Why cant I get past schedule c?

I received lawsuit settlement from back wages. Its a 1099 misc top half and second half of document shows as a w2. 

Irene2805
Expert Alumni

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

You can enter the 1099-MISC in TurboTax as "Other Common Income" which will not generate Schedule C or SE tax.  Please use the following steps:

  1. Click on Federal > Wages & Income.
  2. Scroll down to the Other Common Income section. 
  3. Click on the Start/Revisit box next Form 1099-MISC. 
  4. On the screen Did you get a 1099-MISC?  click on the Yes button.
  5. On the next screen, Let's get the info from your 1099-MISC, enter the information from the 1099-MISC.
  6. On the screen, Does one of these uncommon situations apply? mark the radio button This was money from a lawsuit settlement.
  7. Below the grey line, mark the Yes button to answer Was any part of the lawsuit settlement for back wages?
  8. Enter the amount  that was for back wages in the box that appears.
Amparo Valdez
New Member

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

My 1099 misc does have something in box 10.

DaveF1006
Employee Tax Expert

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

That would be gross proceeds to an attorney. After you enter your 1099-MISC including Box 10, Turbo Tax will ask you how much of that $10,000 is taxable to you. If you indicate none, then that will reduce the taxable amount listed in Box 3.

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Gmo789
New Member

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

I am having this exact same issue and it is extremely frustrating.  I can find no way around this and it keeps making me do a schedule C even though I am not self-employed.   None of the workarounds above worked.  I have used Turbotax for 5 years and this is seriously making me reconsider and just go to a tax office and do it there

 

Has anyone else had any luck not triggering the need to file a schedule C?

DMarkM1
Employee Tax Expert

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

You are correct; Lawsuit settlement income in box 3 on a 1099-Misc should not generate a schedule C.  First, revisit the "Self-employment" topic and delete the business and income there that doesn't belong in order to start over.  

  1. Click "Income & Expenses" tab
  2. Scroll down to "Other Common Income"
  3. "Show More"
  4. "Start/revisit" the 1099-Misc" topic
  5. Enter the form information
  6. Enter a description
  7. On the page titled "Does one of these uncommon situations apply?" Select "This Money was from a Lawsuit Settlement" 
  8. Answer the "Back wages" question at the bottom of the page.
  9. Complete the interview questions. 

 

 

 

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helpmeplease2
New Member

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

Hi @DMarkM1,

 

I'm having the exact same issue as OP. When getting to the review/file step it gives me a loop requesting to add the proceeds paid to an attorney on a schedule c as income. I cannot file without adding the Schedule C even though lawsuit settlement checks are not reported as self income.

LenaH
Employee Tax Expert

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

If a Schedule C continues to populate, it is important that you answer the questions that follow the entry screen for the 1099-MISC. If answered correctly, you will also be able to have this income flow to Other Income will not go to self-employment income. 

 

Please follow the instructions below:

  1. Open or continue your return, if you're not already in it.
  2. Search for 1099-misc and select the Jump-to link.
  3. Edit your 1099-MISC.
  4. Continue past the amounts already entered.
  5. Describe the reason for this 1099-MISC.
  6. Answer This Money Was From a Lawsuit Settlement on the screen Does one of these uncommon situations apply?
  7. Answer No, it was not back wages for the next question.
  8. Answer No for the question Did you have another 1099-MISC?
  9. Your 1099-MISC will flow to Other Income.

Next, please make sure to delete any Schedule C or associated self-employment forms in your return.

  1. Search for Schedule C with the magnifying glass tool on the top of the page.
  2. Select the Jump to Schedule C link in the search results.
  3. Select No to the question Did you have any self-employment income or expenses? 
  4. Click on Tools.
  5. Click on Delete a Form
  6. Scroll down to your forms and look for forms you need to remove and click Delete

@helpmeplease2

stefe1
Returning Member

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

I received a 1099-MISC for law suite settlement with the City of San Diego (my employer) and turbo tax forces me to fill out a Schedule SE even though I'm not self-employed. I've tried things listed here, but I need to know how to fix it.

 

JeffreyR77
Expert Alumni

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

You likely received two statements related to this lawsuit: a W2 and a 1099-MISC.  The W2 portion reports the amount of the settlement that was back wages and the associated taxes that were also paid and withheld on your behalf.  You should treat this as any other Form W2 you would receive.

 

The proceeds of the settlement that are not subject to payroll taxes are reported on Form 1099-MISC.  

 

Please clarify what box is checked on your Form 1099-MISC? 

 

As in other post, box 3 amounts should not generate Schedule C or Schedule SE in TurboTax.   Do you have any other self-employment income from Form 1099-NEC or 1099-K on this tax return?

 

The types of payments that would be included on this your settlement 1099-MISC form include attorney’s fees, punitive damages, emotional distress and other nonphysical injuries, and prejudgment interest. 

 

This is also taxable income to you and no taxes have been withheld.  

Yangjon9
New Member

I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

Could you clarify you answer again for box 10 and also explain on how to avoid schedule C. Because I've tried all these options and it's always asking me to file a schedule C.

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