competition winning to attend conference

[PandaClaw]

My daughter won a music competition which paid $1000 for her to attend the National conference. She received $1000 in 1099-Misc. She only receive this scholarship money if she attends the conference. This scholarship money is for airline tickets, hotels, transportation and food. She didn't earn the money for regular spending but specific for the conference. She is a full time student. How should I report the $1000 and the expenditures for it so she doesn't have to pay taxes for the $1000? She is not a teacher yet, so I can't put expenses as teachers expenses. She is not self employed so I can't expense as self employment expense. She earned $1200 working in summer.

From TT, right now she owes taxes for it.

Thank you for your suggestion.

[IsabellaG · Accepted solution]

This would be taxable income to her because the money was paid for nonqualfiying educational expenses (travel, food, lodging, etc). But if your daughter only had this scholarship plus $1200 from her summer job as income for the year, she would owe no federal tax on it. Total income of $2200 would result in zero tax, and she should get back all of her withholding.

Was this reported in Box 3 of Form 1099-Misc?  If so, enter the 1099-MISC, and describe the reason for this 1099-MISC as Scholarship. Continue, and say that none of the uncommon situations apply. Check that the scholarship did not involve work that's like her main job. Check that she got it in 2018 and that it did NOT involve an attempt to earn money (that one is important). This will report the $1000 as taxable, but not subject to Self-Employment Tax.

If it was reported in Box 7, follow the same instructions, but when you get to the uncommon situations you will make the selection This money was from her scholarship or fellowship. A drop-down will appear, and you need to check No, you didn't perform a service for this money. This will have the same result: taxable but not subject to Self Employment tax.

[PandaClaw]

Thank you for your reply. TT still saying that she owes money for the Federal tax return. W-2 wages $1292, interest $27, Competition scholarship 1099-MISC box #7 $1000. Taxable scholarship excess educational expense $435. TT concludes total income $2754. Federal tax withheld $46. TT only gives me $2077 standard deduction. Therefore she owes $23. I don't understand why she only get $2077 standard deduction. She is full time student and is my dependent.