The amount on the 1098-T will be treated as scholarship (if excess of education expenses) but the 1099-MISC will be reported as "Other (unearned) Income".
It can be tricky to report the amount on Form 1099-MISC as Scholarship income but it is possible.
Also, if the 1098-T shows enough expenses in Box 1, the scholarship in Box 5 might not be claimed as income.
HERE is how to report the income from Form 1099-MISC as Scholarship income, be sure to keep documentation with your tax file.
If you also have an issue with Form 1098-T, please continue with the question and tell us the numbers in Box 1, Box 5, and how much you want to claim as taxable.
Enter the 1099-MISC under
Wages & Income
1099-MISC and Other Common Income
Income from Form 1099-MISC START
Once that entry is done, go to:
Wages & Income
Less Common Income
Miscellaneous Income, 1099-A, 1099-C
Other reportable income START
Type "1099-MISC Scholarship on line 8r " or something similar for the Description
Enter the amount AS A NEGATIVE NUMBER (put a minus sign in front (-)
Finally, return to the Education section and enter as Scholarship Income:
Enter under
Deductions & Credits
Education
Expenses and Scholarships (Form 1098-T)
Continue through the interview and enter the 1098-T if you have one, if not just ignore the screens asking about Form 1098-T and continue until you get to the "Did you Receive a Scholarship or Grant in (XXXX Tax Year)"
The program will say "Don't enter scholarships already reported on Form 1099" but in your situation, since you zeroed-out the 1099-MISC, ignore that warning and enter the amount.
The 1099-MISC and the negative entry will be on Schedule 1 Line 8z
The amount will also be listed on Schedule 1 line 8r
Please verify that all three entries are posted so the scholarship is claimed.
Use these steps to look at Schedule 1
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