If a Schedule C continues to populate, it is important that you answer the questions that follow the entry screen for the 1099-MISC. If answered correctly, you will also be able to have this income flow to Other Income will not go to self-employment income. Please follow the instructions below: Open or continue your return, if you're not already in it. Search for 1099-misc and select the Jump-to link. Edit your 1099-MISC. Continue past the amounts already entered. Describe the reason for this 1099-MISC. Answer This Money Was From a Lawsuit Settlement on the screen Does one of these uncommon situations apply? Answer No, it was not back wages for the next question. Answer No for the question Did you have another 1099-MISC? Your 1099-MISC will flow to Other Income.Next, please make sure to delete any Schedule C or associated self-employment forms in your return. Search for Schedule C with the magnifying glass tool on the top of the page. Select the Jump to Schedule C link in the search results. Select No to the question Did you have any self-employment income or expenses? Click on Tools. Click on Delete a Form. Scroll down to your forms and look for forms you need to remove and click Delete. @Loucarti

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I received a 1099-MISC for a lawsuit settlement. i am being asked to file a Schedule C form, however I am not self-employed. What do i enter for bus. info?

Forum|Forum|5 years ago
February 11, 2021
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TurboTax Deluxe Online

Best answer by LenaH

If a Schedule C continues to populate, it is important that you answer the questions that follow the entry screen for the 1099-MISC. If answered correctly, you will also be able to have this income flow to Other Income will not go to self-employment income.

Please follow the instructions below:

Open or continue your return, if you're not already in it.
Search for 1099-misc and select the Jump-to link.
Edit your 1099-MISC.
Continue past the amounts already entered.
Describe the reason for this 1099-MISC.
Answer This Money Was From a Lawsuit Settlement on the screen Does one of these uncommon situations apply?
Answer No, it was not back wages for the next question.
Answer No for the question Did you have another 1099-MISC?
Your 1099-MISC will flow to Other Income.

Next, please make sure to delete any Schedule C or associated self-employment forms in your return.

Search for Schedule C with the magnifying glass tool on the top of the page.
Select the Jump to Schedule C link in the search results.
Select No to the question Did you have any self-employment income or expenses?
Click on Tools.
Click on Delete a Form.
Scroll down to your forms and look for forms you need to remove and click Delete.

@Loucarti

M

MinhT1

If you receive a form 1099-MISC for a settlement, then you are not considered as self-employed and do not need to file a Schedule C.

In TurboTax, enter your form 1099-MISC and follow the interview until you arrive at the page titled Did this involve an intent to earn money?. Answer that this did not involve an intent to earn money. The amount will be reported as Miscellaneous income and will not be subject to Self-employment tax.

In TurboTax, there is a work-around. Although you may receive this income every year, say that you only receive the 1099-MISC only in 2020, not in previous years and not in 2021, you will then have the screen where you can say that it did not involve an intent to earn money.

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K

kee6812Author

Thanks for the info!

I started entering the info in from the 1099-misc, what seems to be triggering the schedule C is the gross attorney fees in box 10. After I enter that number, it says I need to fill out the schedule C. But since I am not self employed, I’m not sure what to enter. It looks like the schedule c has to be filed to pay taxes on box 10? Is that right?

J

JeffreyR77

It depends. Box 10 indicates you were paid fees as an attorney.

That would indicate you were compensated for your expertise as an attorney.

If this was limited to expert testimony and was an isolated one time situation where you provided this and were compensated for it you can enter your Form 1099-MISC with box 10 and not complete a Schedule C.

If you provide expert testimony on a recurring or aperiodic basis, you should complete a Schedule C and can claim any ordinary and necessary expense you incur in the line of providing ad hoc legal services.

These could include expenses for use of an office in the home if you provide these services from home.

What Are Deductible Business Expenses

G

Gmo789

I am having this exact same issue and it is extremely frustrating. I can find no way around this and it keeps making me do a schedule C even though I am not self-employed. None of the workarounds above worked. I have used Turbotax for 5 years and this is seriously making me reconsider and just go to a tax office and do it there

Has anyone else had any luck not triggering the need to file a schedule C?

DMarkM1

You are correct; Lawsuit settlement income in box 3 on a 1099-Misc should not generate a schedule C. First, revisit the "Self-employment" topic and delete the business and income there that doesn't belong in order to start over.

Click "Income & Expenses" tab
Scroll down to "Other Common Income"
"Show More"
"Start/revisit" the 1099-Misc" topic
Enter the form information
Enter a description
On the page titled "Does one of these uncommon situations apply?" Select "This Money was from a Lawsuit Settlement"
Answer the "Back wages" question at the bottom of the page.
Complete the interview questions.

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H

helpmeplease2

Hi @DMarkM1,

I'm having the exact same issue as OP. When getting to the review/file step it gives me a loop requesting to add the proceeds paid to an attorney on a schedule c as income. I cannot file without adding the Schedule C even though lawsuit settlement checks are not reported as self income.

G

gauna632

, I being asked to file a Schedule C form, however I am not self-employed. I need help to get this not to triggers schedule C?

WendyN2

Here is a quick step-by-step to get you to where you want to be for your Royalty Income situation given that you state it does not pertain to "C" Income:

Personal > Personal Income > Skip W2s for now and click on "Continue" > Scroll down to "Other Common Income" section > See "Income From Form1099-MISC" - Click on Start to the right of that line > Click on "Yes" > Fill out the Payor Field, The SS/FID # field (whichever applies), and fill in the amount for Box 2 - Royalties then click on "Continue" > If either selection option applies to you, then select the appropriate one - my guess is that for your situation this would be the first option as you state this is NOT "C" income > click "Continue" > It will then prompt you to enter Investment Information on a Schedule E.

D

Dlopez17

It was for a lawsuit settlement from his company and is asking to file a schedule c form, however he is not a self-employed.

J

JamesG1

The income should not be self-employment income. To report taxable legal settlements in TurboTax Online, follow these steps.

Down the far left side, click Federal.
Across the top, click Wages and income.
Under Your income, find Other Common Income. Click Show more.
Under Form 1099-Misc, click Start/Revisit.
At the page 1099-Misc Summary, click on Add another 1099-Misc.
Complete the information requested.
At the page Describe the reason for this 1099-Misc, explain the reason.
At the page Does one of these uncommon situations apply?, click on This was money from a lawsuit settlement.
Answer Was any part of the lawsuit settlement for back wages?
The income will be reported on 1040 Schedule 1 Part 1 line 8 Other income.

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D

Drurybt

The problem that myself and others are having is that these directions DO NOT do anything but create a Schedule C. I have tried every suggestion on this thread and nothing works. What you’re describing should simply list this as other income but it forces you to create a Schedule C.

At this point I think that either TurboTax is incorrect or the 1099-MISC is incorrectly filled out (probably the amount in box 10).

L

Loucarti

Did anyone figure out a solution for this? I’ve tried everything and there doesn’t seem to be a way to avoid the schedule c. Is filing with someone else the only option?

LenaHAnswer

If a Schedule C continues to populate, it is important that you answer the questions that follow the entry screen for the 1099-MISC. If answered correctly, you will also be able to have this income flow to Other Income will not go to self-employment income.

Please follow the instructions below:

Open or continue your return, if you're not already in it.
Search for 1099-misc and select the Jump-to link.
Edit your 1099-MISC.
Continue past the amounts already entered.
Describe the reason for this 1099-MISC.
Answer This Money Was From a Lawsuit Settlement on the screen Does one of these uncommon situations apply?
Answer No, it was not back wages for the next question.
Answer No for the question Did you have another 1099-MISC?
Your 1099-MISC will flow to Other Income.

Next, please make sure to delete any Schedule C or associated self-employment forms in your return.

Search for Schedule C with the magnifying glass tool on the top of the page.
Select the Jump to Schedule C link in the search results.
Select No to the question Did you have any self-employment income or expenses?
Click on Tools.
Click on Delete a Form.
Scroll down to your forms and look for forms you need to remove and click Delete.

@Loucarti

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L

Loucarti

I have done all these things and have even deleted and started from scratch to see if that helps. It doesn’t. It always links to the schedule c. I called and spoke to someone on the phone and after about 45 minutes of screen sharing they said there was nothing they could do, I’d have to just file the schedule c (even though it’s not applicable for me) or pay the $100 to upgrade and talk to a cpa. Not sure what good that’s going to do since I don’t need tax advice, I just need the website to work.