Received a W-2 and 1099-Misc for a Lawsuit Settlement

[user17749268517]

Hello! 

I received a W-2 and a 1099-Misc from a lawsuit settlement for back wages. The W-2 shows the wages I was owed: $400, and the 1099-Misc shows another amount: $1,600, for a total check I received of $2,000. My question is, do I report the $400 in the "W-2" section and the $1,600 in the "1099-Misc and Other Common Income" section? If so, do I need to state in the "uncommon situation" section that the $1,600 is from a lawsuit settlement and the back wages amount that I received? This would be the same amount ($400) as the W-2 section. Is this double-counting it? Any help would be greatly appreciated. 

[Mike9241]

see this IRS webpage

https://www.irs.gov/government-entities/tax-implications-of-settlements-and-judgments 

You got a W-2 $400 report as such. 

as to the $1600 you can not add this to the W-2 because it will result in a mismatch when your return hits the IRS computers. Record it as MISC income not subject to S-E taxes. 

[user17749268517]

Thank you! Do I need to record the $400 again in the uncommon situation screen? 

[DianeW777]

No, record the $400 on the W-2 you did receive, no other location in TurboTax. Record the $1,600 as follows.It's important that you made the appropriate selections so that TurboTax does know that it was not self employment income.

1. Open your TurboTax Online/Mobile or TurboTax Desktop tax return
2. Search (upper right) > type 1099misc > click the Jump to... link
3. Begin your entry of the 1099-MISC.
4. It's important for you to select 'None of these apply" and then you should also select the following:
   • 'No' on the screen 'Did the '____' involve work that's like your main job?
   • 'No' on the screen 'Did the '____'  involve an intent to earn money?'

This will report the income without any business activity and it will show up on Form 1040, Line 8 (From Schedule 1, Line 8z).

• Continue to complete this section.