Solved

1099-MISC, "Gross proceeds paid to an attorney" for a automobile damage settlement check

Forum|Forum|2 years ago
August 8, 2023
3 replies
0 views

A county snowplow backed into my car. They accepted fault and sent a check for the damage (~$2,500), which was used to cover most of the damage. I received a 1099-MISC. The problem is, TurboTax put that on a Schedule C and the IRS has this amount flagged as self-employment income. I cannot figure out how to enter this on the 1099-MISC worksheet so that it doesn't create a Schedule C. I tried entering zero (0) as the "Taxable amount from box 10 to Schedule C" but TurboTax still requires a Schedule C to be specified. Double clicking to select, it prompts "Enter the Schedule C principal business or profession" I'm not self-employed. How do I get past this? How else should this settlement check be entered?

Best answer by Critter-3

Enter this Miscellaneous Income:

Click on the Federal tab.
Click on Income & expenses.
Scroll down to Less Common Income.
Click on Start or Update button Miscellaneous Income, 1099-A, 1099-C
On the next screen (Let's Work on Any Miscellaneous Income), click the Start or Update button for Other reportable income.
Did you receive any other taxable income. Click Yes.
Other Taxable Income, enter a description and the amount. Click Continue.
Click Done.

The income will be reported on Schedule 1 line 8 (z) with the description that you entered.

To then reverse the non taxable income complete the same steps again and this time make a negative entry so it will net as zero.

Critter-3Answer

Enter this Miscellaneous Income:

Click on the Federal tab.
Click on Income & expenses.
Scroll down to Less Common Income.
Click on Start or Update button Miscellaneous Income, 1099-A, 1099-C
On the next screen (Let's Work on Any Miscellaneous Income), click the Start or Update button for Other reportable income.
Did you receive any other taxable income. Click Yes.
Other Taxable Income, enter a description and the amount. Click Continue.
Click Done.

The income will be reported on Schedule 1 line 8 (z) with the description that you entered.

To then reverse the non taxable income complete the same steps again and this time make a negative entry so it will net as zero.

Hal_Al

Employee

The basic problem is that the issuer has reported the money in box 10 of the 1099-Misc and it should have been reported in box 3.

When you enter the 1099-Misc, in TurboTax (TT), enter it in box3 rather than box 10. Then follow the interview carefully, to keep TT from identifying this as self employment income. This will put it as other income on line 8z of Schedule 1.

Alternatively, you can use the entry method described by @Critter-3

D

Doornail4151Author

Thank you @Critter-3 and @Hal_Al . These are both good answers and are very helpful. After working with the IRS over several days, I may have sorted this out with them directly and avoided the need for an amended return. However, I have to wait 60+ days for the official word to show up on my IRS transcript. Until that happens, I'll be keeping your answers handy in case an amended return is needed.

Thank you again for the quick replies.