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Mark from FreeTax.com explains that if you receive a 1099 miscellaneous form that is not self-employment income, you should have the payer issue a new 1099 with the amount in box three as other income, not box seven as non-employee compensation. IRS expects box seven compensation to be reported on Schedule C for self-employment taxes. Income that is occasional and not meant for profit, like prizes or legal damages, is not considered self-employment income. Consequently, it doesn't require reporting on Schedule C. Instead, 1099 miscellaneous income should be reported on line eight of Schedule one as other income subject to regular tax only.