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?

[KathrynG3]

To enter Form 1099-MISC, in general, follow these steps: 

• Inside your TurboTax program, enter 1099misc in the search box and
• Select the Jump to link in the search results.

This will take you to the interview for Form 1099-MISC entered as Other Common Income.

However, if this is a Legal Settlement and taxable, be sure to describe the reason as Lawsuit Settlement and select This was money from a lawsuit settlement on the page entitled: Does one of these uncommon situations apply?

For more details, see: Are legal settlements taxable?

Where do I enter an award from a taxable legal settlement?

Where do I enter a 1099-MISC?

@Loucarti

[Drurybt]

@Loucarti 

Save yourself the upgrade fee and just file the schedule C. I talked with a TT CPA for this issue and that’s what it ended up coming to. Just answer the questions as they pertain to you, which I believe will be very few since most are about your non existent “business”. 

I had gone through once and it said I was getting a business tax break. You don’t want that. But if you answer the questions correctly, it will create the schedule c and you can file. 

[Loucarti]

Thanks for your input. I don’t really want to file a schedule c though if it’s incorrect. Couldn’t that cause issues down the line? Seems like turbo tax needs to fix their software rather than advise people to file additional forms they don’t need...

[Loucarti]

I’ve done all of this but it still tried to classify as self employed income.

[Drurybt]

Yup I completely agree. I think it’s a TT issue that will hopefully be fixed in time for next year.... the CPA told me it was fine and I needed to file before the deadline so I went with it..... hopefully it’s right. 

[DaveF1006]

Hello !! Did any of you read any of the earlier posts and were you able to understand them? Follow these precise steps in entering your 1099 MISC.

1. Log into turbo tax 
2. Before you take the remaining steps, I suggest you delete the original 1099-Misc you recorded in your return so this procedure will work correctly. once it's deleted then reenter using the following steps
3. Go to federal>wages and income>other common income
4. Form 1099-MISC>revisit
5. Select edit next to the 1099-MISC
6. Scroll through the entry and then the program will ask Describe the reason for the 1099-Misc 
7. As you move through the screen, the program will ask if this is like your main job.  If you say yes, it will expect you to fill out a schedule C. For this purpose, say no.
8. Next it will ask how often did you receive this income. If this was the first year you received it, indicate so.
9. Now it will ask you if you have the intent to earn money.  Indicate no.
10. if this is done correctly, it will not ask for a Schedule C because this will appear as OTHER INCOME in your return. (No Schedule C)

Be sure you don't enter this as a 1099-MISC in self-employment income. There are a couple of reasons why it asked for a schedule C

• You entered this in the self-employment section.
• Or you either indicated there was an intent to earn money or it was like your main job.

[Loucarti]

Yes I have literally walked through and done each recommended thing in all of the posts above to the letter and each time it generates a schedule c. I’ve started from scratch each time so it’s not carrying over old information. There is clearly a programming error on TT part, there is no way around it. It shouldn’t be this difficult. 

[estebanmendoza]

I have followed the instructions but my state returns still show "self-employment tax".  I can't seem to get rid of this even though I earned no self-employment in 2021.  Thanks in advance. 

[KrisD15]

You need to enter the 1099-MISC as follows, but you also need to know what the settlement paid. 

If it paid back wages, it's taxable. 

If medical injures, it is not taxable (also those medical expenses paid would not be eligible as deductions on your Schedule A)

Enter the 1099-MISC 

Under Income

Other Common Income

Income from 1099-MISC

The amount should be reported in Box 3

On the screen that asks "Does one of these uncommon situations apply? click "This was money from a lawsuit settlement" 

Next select if any was for back wages and continue

The program will not ask about Schedule C.