Questions on 1099-NEC for court reward

[big_baguette]

Hi I've received a 1099-NEC as a court reward from my previous company as they had failed to pay my wage(note it happened more than 2 years ago). It includes back wages and punishment. I found I was asked to link to Schedule C in the fed filing final checks.

Question:

1. Is it correct that they send 1099-NEC instead of 1099-MISC?
2. How should I input the form, I've seen answers to use self employed page, all the questions for Schedule C(self employed) didn't makes sense in this context.

Thanks in advance!

[AliciaP1]

Yes, the 1099-NEC is correct for the wages, but you should have received a 1099-MISC for the non-wage payment.  You need to mark that the 1099-NEC was received for a Lawsuit Settlement and that a portion of it was for back wages.  You will want to delete the Schedule C and 1099-NEC entry you have already made and re-enter the 1099-NEC.

To delete your 1099-NEC you can follow these steps:

1. Within your return, click on Tax Tools in the black menu on the left side of the screen.
2. Click on Tools.
3. Click on Delete a Form. 
4. Scroll down to your Form 1099-NEC and click Delete.
5. Under Federal in the black menu bar click Wages & Income to get back into your tax returns.

To re-enter the 1099-NEC and enter the expense to offset the income you can follow these steps:

1. Sign in and open or continue your return.
2. Search for 1099-NEC and select the Jump to link.
3. Enter the information in full from the 1099-NEC and Continue
4. On the Describe the reason for this 1099-NEC screen enter Lawsuit and Continue
5. Choose This was money from a lawsuit settlement
6. Answer Yes on the ...back wages pop up and enter the portion of the payment that was in lieu of wages

[big_baguette]

Thanks for the answer, I believe the solution is the way I did it the first time.

Can you advise how to handle the issue where the page is asking to link Schedule C? Just ignore it?

[ShirlynW]

No, you should not ignore the message, you will not be able to file your return.  As @AliciaP1 suggested, delete the form.  Delete Sch. C and Schedule C worksheet.

[big_baguette]

Hi I did delete Schedule C and 1099 NEC and re enter, this is what I got. Please advise.

Note the “other” check box is not available to check.

Also if I checked “None of these applies to me” in the income category page then I don’t get these questions. 

[AliciaP1]

You have to enter the portion of the payment that represents back wages to clear the error.  In your first screenshot, the blank box is where you will enter that amount. For example, if your 1099-NEC box 1 is 15,000 and of that amount $10,000 represents back wages, enter 10,000 in the box that shows.  This will stop the system from trying to connect a Schedule C because it will have the complete information.

@big_baguette 

[big_baguette]

@AliciaP1: I did input a value in, it is still showing error.

[AliciaP1]

You may need to delete both forms and re-enter the 1099.

To delete a specific form in TurboTax Online you can follow these steps:

1. Within your return, click on Tax Tools in the black menu on the left side of the screen.
2. Click on Tools.
3. Click on Delete a Form. 
4. Scroll down to your form and click Delete.
5. Under Federal in the black menu bar click Wages & Income to get back into your tax returns.
6. Proceed entering/reviewing your return.

@big_baguette