1099 misc scholarship

[Kat23jor]

I received two 1099 misc for a scholarship that I received. One has an amount in box 3 and the second 1099 misc has an amount in box 7. Both of these 1099 misc exceed my 1098-t.

Do I report both 1099 misc under the 1099 section and the 1098T under the education section? 

Do I enter anything under scholarships?

[LinaJ2020]

The school should have reported the scholarship on the Form 1098-T.  I don't know why they would report it on Form 1099-MISC.  So, did they report any scholarship amount on the Form 1098-T?   If you report the Form 1099-MISC as they are, the IRS would expect you to report the income ( scholarship in this case) as self-employed.  This is not the correct reporting.  I would suggest you contact your school to receive a corrected Form 1098-T.

[NCperson]

contact whomever sent you the 1099-misc as well; something doesn't seem correct

[brommabo]

Our son applied for and got a scholarship from my husband's company that was reported on a 1099-MISC Box 7 in my son's name($3000). Do we put that as a scholarship on our tax return which affects education credit negatively since he has a full tuition and fees scholarship from his college? (We have claimed him as a dependent.)Or does he report it as self employment income income and  file his own tax return? He had no other income in 2019.

[Opus 17]

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@brommabo wrote:

Our son applied for and got a scholarship from my husband's company that was reported on a 1099-MISC Box 7 in my son's name($3000). Do we put that as a scholarship on our tax return which affects education credit negatively since he has a full tuition and fees scholarship from his college? (We have claimed him as a dependent.)Or does he report it as self employment income income and  file his own tax return? He had no other income in 2019.

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That is income in your son's name and goes on your son's return. When entering the 1099-MISC, I believe there is a box under "special circumstances" to check for scholarship.  This is not self-employment and he does not have to file a schedule C.  (The payer should have used box 3.)

However, if he has a full scholarship for tuition and fees, you should not be getting any tax credits.  There are some tricks you can do (sometimes) in which

a: you treat part of the scholarship as if it paid for room and board instead of tuition.

b: he pays income tax on this part of the scholarship.

c: you are treated as though you paid part of the tuition with your own money, which gives you a credit bigger than his tax bill.

This is tricky and requires coordination and advanced knowledge.  I'm a bit concerned that you are claiming to have a credit on a full scholarship, and yet you don't know how to report the additional taxable scholarship from the third party.   You might want to write back with more info.  @Hal_Al I know you know this area better than I do.

[Hal_Al]

I agree with Opus 17, the income is in your son's name and goes on your son's return. After entering the 1099-MISC, you get a screen "Does on of these Uncommon Situations apply?" Check the box "this money was from my scholarship or fellowship".  Then check NO to the question "did you perform a service to earn this money".  TurboTax will put the $3000 on line 8 of Schedule 1 with the notation "Scholarship or fellowship from 1099-MISC".  It does not go on Schedule C, self employment.  He will owe a little tax on that income, because it is not "earned income".

Because the money was reported on a 1099-Misc, you should report it as taxable income on your son's return*.  This then allows you to claim the tuition on your tax return, for the  tuition credit, because that $3000 worth of tuition was not paid with "tax free scholarship".

*If you would come out better by treating this as tax free scholarship, on your son' return, there is a way to do that using a work around. Bur it risks an IRS inquiry because of the 1099-Misc.