Question

1099 nec settlement

Forum|Forum|2 years ago
February 2, 2024
1 reply
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I received a 1099 nec for a settlement I’m not self employed

after entering the information it says that I’m missing info but I filled out all the questions including clicking its a lawsuit.

ive seen other people post the same problem but I don’t know how they ended up fixing it

M

MonikaK1

Form 1099-NEC is generally intended to be used for nonemployee compensation that is earned by a contractor or other self-employed individual. If you received a payment that was reported on a Form 1099-NEC, but you didn't receive the income for work as self-employed on an ongoing basis, you can enter it in TurboTax and identify the reason for the payment:

In Wages and Income, select Other Common Income and See More
Select Form 1099-NEC
Answer the questions that appear, and enter a description of the reason for the payment
At the screen, "Does one of these uncommon situations apply?", select "This was a lawsuit settlement" if that is the best choice, or enter that it was from a one-time activity (so that it doesn't incorrectly get identified as self-employment income).
Answer the question regarding whether any of the payment was for back wages

See this thread for another discussion of this topic.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

K

KTom

I have the same question, I received a 1099-NEC for a legal settlement. In TurboTax Premier, I used the 1099-MISC and Other Common Income section to enter the 1099-NEC. Once I entered all the information, I was asked the question 'Does one of these uncommon situations apply?', I selected the radio button 'This was a money from lawsuit settlement.'. The next question was 'Was any part of the lawsuit settlement for back wages?', I selected the 'No' radio button as it was not for back wages.

Now, I get the message 'Looks like we're missing some info', one of your 1099-NEC forms doesn't include enough info for us to know where to report the income on your return. We recommend you go back and Edit the following form, answering all the questions so that we can link it to the right activity.

I have answered all questions correctly as expected. What should I do now so that 1099-NEC is reported correctly on my TurboTax IRS return?

L

LeticiaF1

There is a work around to get your settlement income to get reported correctly on your tax return.

First you will need to delete the 1099-NEC. To do this:

Open your return
Click on Federal Taxes
Go to Wages & Income
Under Other Common Income, Revisit Form 1099-NEC
Delete it

To enter the settlement again :

Go to Wages & Income
Scroll to the bottom under Less Common Income select Start (or Update) for Miscellaneous Income.
Choose Other reportable income
Answer Yes to Any Other Taxable Income
On the next screen enter the description and amount

Your settlement will now get reported as Other Income on your tax return. Feel free to reach back if you have any other questions.

@KTom