
Quoting
llworking
Because it was technically a settlement from the attorney to correct an error that the attorney made, it would not be wages. However, it would be taxable because it replaced taxable income. It however is not non-employee compensation and box 7 should not have been checked. Box 3 should have been checked instead.
Rather than amending the tax return, the OP should ask the attorney to correct the 1099, and to send the corrected copy to the IRS. Otherwise what is likely to happen is that about a year from now the OP will receive a CP-2000 letter from the IRS pointing out that self employment taxes should have been paid on the money.