1099 NEC for a CA wait time penalty 2267

[jasinskida]

I received a 1099 NEC for a CA wait time penalty.  I believe it is federally taxable but not FICA taxable as it is not wages.  Is it CA taxable also? 

And more importantly - how do I enter it - it doesn't really fit any of the uncommon situations (own a farm, should be on a W2, medicaid waiver etc).  Do I select 'money from a lawsuit settlement?' or 'not earned as an employee or self- employed, it is from a sporadic activity or hobby'.   If I choose none of these then it wants me to complete a Schedule C and enter Business Income and expenses and that makes no sense in this situation. 

Thank you!

[MaryK4]

Yes, the Wait Time Penalty is taxable income for both federal taxes and California.  It is not subject to FICA - although it is related to wages, it is not compensation.  You enter the 1099-NEC and choose 'not earned as an employee or self- employed, it is from a sporadic activity or hobby' so that it will be included as Miscellaneous Income.  

The Wait Time Penalty against the employer when there is a willful failure to pay wages due the employee at conclusion of the employment relationship.