You can report it this way:
Click Federal
Click Wages & Income
Click “See All Income” if needed
Scroll down (PAST SELF-EMPLOYMENT) to “Other Common Income”
Click “Show more”
Scroll down to “Form 1099-MISC”
Click Start
Enter the 1099-MISC and Continue
On the “Describe the reason for this 1099-MISC” screen enter "Scholarship” and Continue
Select “None of these apply” and Continue
Select “No, it didn’t involve work like main job” and continue through the interview selecting the appropriate answers
The amount from the 1099-MISC will be reported as Other income on the 1040 line 7a, not as Self-employment
The IRS wants scholarship income listed on line 1 of the 1040, and if it were entered from a 1098-T, that is where the TurboTax program would put it.
As KathrynG3 says, you can make a negative entry to negate this income. IF THAT IS WHAT YOU WANT TO DO, after making the negative entry in the "Other Common Income" section, you would continue to the "Education" section under "Deductions & Credits".
Go to Federal
Deductions & Credits
Scroll down to "Education" and click Show more
Scroll down to "Expenses and Scholarships (Form 1098-T)" and click Start
Answer "No" you don't have a 1098-T, and "No" you don't have an exception, until you can enter the amount of a scholarship.
Enter the amount reported on the 1099-MISC here if you are sure it is a scholarship.
(if you're not sure, you can just leave it entered as "Other Common Income")
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