Schedule C NOT Needed

Forum|Forum|5 years ago
April 1, 2021
2 replies
5 views

I have a 1099 Misc that includes legal fees for the settlement of a class action suit against my employer.

I keep getting an error message when I do my final check that I need to attach this to a Schedule C, but it is not a business. Personally I would like to do that because I could then take an above the line deduction for the attorney fees. So is this truly an error, or do I skip it OR can I used a Schedule C to report this and take the above the line deduction?

TurboTax Home & Biz Windows

JeffreyR77

Level 10

The award for legal fees is taxable income.

The employment portion of your settlement included the tax portion and was reported on a Form W2 including these taxes.

The 2017 Tax Cuts and Jobs Act eliminated the ability to deduct legal fees on Schedule A.

You should revisit the Personal Income section where you entered this Form 1099-MISC.

Verify the amount is entered in Box 3.

On the next screen enter Lawsuit settlement as the description of the payment.

On the next screen verify This was money from a lawsuit settlement is selected from the list.

Verify that you have answered the question Was any part of this settlement for back wages: No.

This settlement is in reference to the payment and the dollars included on the Form 1099-MISC not the overall lawsuit.

Answering this way should remove the errors you are receiving from the review.

CaryGAuthor

Level 2

THANK YOU. That is exactly what I did, and Turbo Tax still keeps wanting me to tell it which Schedule C this is related to when I do my final check. Obviously a glich in the Turbo Tax system.