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Hi Target Corp OT lawsuit, paid $16.00 in non-wages, but put $16 in 1099Misc on both box 3 and box 7. I think it's wrong, and should be either 3 or 7, not both. Thoughts?

Forum|Forum|7 years ago
June 6, 2019
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Turbo Tax then reports $32 in 1099 income (and $32 is included in gross income). I properly answered the question that it was a lawsuit settlement.

TurboTax Deluxe Windows

Best answer by ToddL

You can "back-out" the duplicate income by making an offsetting entry in Line 21, Other Income of Form 1040. This will keep the 1099-MISC intact for purposes of the IRS matching it to your return.

To enter the "expense":

Go to Less Common Income, Miscellaneous Income and Other reportable income (or enter "other reportable income" in the Search Box and Select "Jump to other reportable income")
Continue to the screen "Other Taxable Income". Enter the description as "Cost of Lawsuit Income" and the amount as a negative number. These are NOT wages.

A corresponding negative amount will be entered, and line 21 will be zero. See the attached screenshot example (different descriptions, but still offsetting).

T

ToddLAnswer

Employee

You can "back-out" the duplicate income by making an offsetting entry in Line 21, Other Income of Form 1040. This will keep the 1099-MISC intact for purposes of the IRS matching it to your return.

To enter the "expense":

Go to Less Common Income, Miscellaneous Income and Other reportable income (or enter "other reportable income" in the Search Box and Select "Jump to other reportable income")
Continue to the screen "Other Taxable Income". Enter the description as "Cost of Lawsuit Income" and the amount as a negative number. These are NOT wages.

A corresponding negative amount will be entered, and line 21 will be zero. See the attached screenshot example (different descriptions, but still offsetting).