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?

[zacharyr0b1]

I am having the same issue. This is the full picture. I received a settlement for a Class Action Lawsuit. This generated two tax forms a W-2 with taxes withheld and a 1099 MISC. I have inputted the W-2 without an issue. The 1099-MISC loops and attempts to create a Schedule C. The 1099MISC has 1800 listed in Box 3 and 1600 in box 10 for attorney fees. I follow the question in the interview. I select the box that says that these funds are from a settlement of a lawsuit. I then include that 1800 listed in Box 3 which matches the amount listed on the W-2  previously entered is from back wages. This is supported in the letter and W-2 that was sent from the law firm that says "The settlement payment constitutes wages subject to withholding." The other part is non-wage income as the letter confirms in the next sentence. The next section asks how much of box 10 is taxable. I am not sure if the full amount of none of the amount is taxable. I have done both and either direction asks me to then file schedule C.  Is the income in Box 10 Taxable? How do I bypass Schedule C as I don't believe that is correct? Thank you for your help and I hope the above description provides a full picture of the problem. 

[LenaH]

If a Schedule C continues to populate when you are inputting your 1099-MISC, 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. Click Edit your 1099-MISC.
4. Continue past the amounts already entered. Make sure you enter the amount in Box 3 and the amount in Box 10. 
5. On the page Enter Taxable Attorney Fees, it is likely that the amount in Box 10 was the attorney fee. In that case, enter $0. Payments made to an attorney consist of attorney's fees plus other expenses (such as costs or settlement fees). If you cannot determine the amount of the attorney's fees or the other expenses, the entire amount is considered Gross attorney's fees. Generally, legal fees are not tax deductible and therefore, would be added to your Box 3 amount. 
6. Describe the reason for this 1099-MISC.
7. Answer This Money Was From a Lawsuit Settlement on the screen Does one of these uncommon situations apply?
8. Answer No, it was not back wages for the next question.
9. Answer No for the question Did you have another 1099-MISC?
10. 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. 

@zacharyr0b1

[kern1431]

I deleted Schedule C and Turbotax will not let me efile the tax return.

[u0344096]

@LenaH 

I'm having the same issue, when entering the attorney fees from box 10 it creates a Schedule C, it does not matter if I mark that this is a back wage settlement. What do I need to do about box 10 on the form

[KathrynG3]

It depends. When entering Box 10 for Gross Attorney's Fees, a drop down appears for the Taxable Portion. 

Regarding the Taxable Portion: Enter the portion of the payment you received that is considered your fees on the appropriate line. This amount will transfer to the Schedule C self-employed business that you designate.

When Form 1099-MISC is marked as not back wages, it will be reported as Other Income not subject to self-employment tax. 

The lawsuit settlement will otherwise appear on Schedule 1, Line 8 as Other Income from Box 3 of 1099-Misc.

For more information regarding reporting back pay, see: About Publication 957, Reporting Back Pay and Special Wage Payments to the Social Security Administr....

[gauna632]

I check several time and I can see where is asking if this was to generated money? please help

[gauna632]

, I being asked to file a Schedule C form, however I am not self-employed. I need help to get this not to triggers schedule C? 

[WendyN2]

Here is a quick step-by-step to get you to where you want to be for your Royalty Income situation given that you state it does not pertain to "C" Income:

Personal > Personal Income > Skip W2s for now and click on "Continue" > Scroll down to "Other Common Income" section > See "Income From  Form1099-MISC" - Click on Start to the right of that line > Click on "Yes" > Fill out the Payor Field, The SS/FID # field (whichever applies), and fill in the amount for Box 2 - Royalties then click on "Continue" > If either selection option applies to you, then select the appropriate one - my guess is that for your situation this would be the first option as you state this is NOT "C" income > click "Continue" > It will then prompt you to enter Investment Information on a Schedule E. 

[Dlopez17]

It was for a lawsuit settlement from his company and is asking to file a schedule c form, however he is not a self-employed.

[JamesG1]

The income should not be self-employment income.  To report taxable legal settlements in TurboTax Online, follow these steps.

• Down the far left side, click Federal.
• Across the top, click Wages and income.
• Under Your income, find Other Common Income.  Click Show more.
• Under Form 1099-Misc, click Start/Revisit.
• At the page 1099-Misc Summary, click on Add another 1099-Misc.
• Complete the information requested.
• At the page Describe the reason for this 1099-Misc, explain the reason.
• At the page Does one of these uncommon situations apply?, click on This was money from a lawsuit settlement.
• Answer Was any part of the lawsuit settlement for back wages?
• The income will be reported on 1040 Schedule 1 Part 1 line 8 Other income.

[Drurybt]

The problem that myself and others are having is that these directions DO NOT do anything but create a Schedule C. I have tried every suggestion on this thread and nothing works. What you’re describing should simply list this as other income but it forces you to create a Schedule C. 

At this point I think that either TurboTax is incorrect or the 1099-MISC is incorrectly filled out (probably the amount in box 10). 

[ColeenD3]

Please see this answer from DianeW777 as a workaround. Her post is the last in the thread.

1099-MISC

[Loucarti]

Did anyone figure out a solution for this? I’ve tried everything and there doesn’t seem to be a way to avoid the schedule c. Is filing with someone else the only option?

[LenaH · Accepted solution]

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

[Loucarti]

I have done all these things and have even deleted and started from scratch to see if that helps. It doesn’t. It always links to the schedule c. I called and spoke to someone on the phone and after about 45 minutes of screen sharing they said there was nothing they could do, I’d have to just file the schedule c (even though it’s not applicable for me) or pay the $100 to upgrade and talk to a cpa. Not sure what good that’s going to do since I don’t need tax advice, I just need the website to work.