Report 1099 - NEC

[jsalazr]

I received a settlement amount from a lawsuit with my former company. Part of it was reported in the W2, but the other was given as a result of emotional distress damages performed by my former company in the 1099 -NEC. When I report it in Turbotax, and I enter it as money result of lawsuit settlement, but not for back wages , in relates column says Missing INFO!, and it doesn't allows me to continue indicating that the information will be removed. What do I need to do to report the 1099 - NEC?

[MonikaK1]

To enter a Form 1099-NEC that is not from working to make a profit, enter it in Wages & Income, Other Common Income 1099-NEC.

When you enter the form in TurboTax Online, this screen appears:

Select "lawsuit settlement" as the type of income.

In Desktop, the wording is somewhat different but it has the choices "lawsuit settlement" or "money not earned as an employee or self-employed".

See this IRS article for more information. You might check with your legal representative to be sure that the emotional distress damages are the taxable type (punitive damages) and not personal injury damages, which would be nontaxable.

Under current law, you can exclude from income on the Federal return the amount of any damages (other than punitive) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness.