It depends. If your wife is in graduate school, then there is a special tax treatment. Mainly, report Form 1099-MISC exactly as received since the IRS receives a copy. They will be looking for the income on your return.
To move the income from Form 1099-MISC to another art of your return, such as Line 1, Do this:
- From the left menu, select Federal
- Wages & Income scroll all the way down to Less Common Income and click Show More
- Select the last listed option for Miscellaneous Income 1099-A, 1099-C, click Start
- Next, select the last listed option Other Reportable Income
- Did you receive any other taxable income, click Yes
- Other Taxable Income: Enter your description and the amount and click Continue and Done. Disregard the comment "Do not enter income from Form 1099-MISC here" because this is meant to guide taxpayers reporting typical 1099-MISC income. Your case is less common and this is how you can report it in TurboTax.
Secondly, in this scenario, to be in compliance with the IRS and report Form 1099-MISC you received, report it as "an in and out."
- Repeat Steps 1-6 and enter the income amount as a negative
- For the second description write: Form 1099-MISC reported as Scholarship
If this is your scenario, the instructions above will
- get the scholarship to the appropriate line where it belongs
- prevent the scholarship from being considered self-employment
You will see on the Other Miscellaneous Income Summary the full amount received and the full amount reported as a negative.
The IRS expects this treatment if you need to report it somewhere else on the return.
Click these articles for more information:
Where do I enter a 1099-MISC?
Are my scholarships, fellowships, or grants taxable?
