Law suit settlement

Forum|Forum|6 years ago
March 10, 2020
2 replies
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I received a W-2 for a lawsuit settlement. I entered the information from the W-2 into Turbo Tax in the Wages Section.

Turbo Tax does not treat the money as earned income, but as earnings from Self-employment and generates a Schedule SE. Please explain

MarilynG

Level 15

You probably also received a 1099-Misc with an amount in Box 7; this is what is generating the Self-Employment income, not the W-2.

In the follow-up questions after entering your 1099-Misc, choose 'this work is not like my main job' and then 'no intent to earn money' (screenshots).

This will put the income under 'Other Income' instead of Self-Employment Income.

Click this link for more info on Legal Settlements.

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iturmanAuthor

Level 2

Thank you for reply, but i don't think that's the answer. The lawsuit settlement organization sent a W-2 and a 1099 Misc. the 1099 Misc income was entered and appears as Misc Income.. The W-2 statement had all the proper taxes shown, Fed withholding, St withholding, Social Security and Medicare Withholding. The Fed and State withholding amounts are applied correctly. Its strictly the Earnings on the W-2 that appears as Self-employment income, why?