Income reported in box 3 of a 1099-MISC is self-employment income as far as the IRS is concerned. Follow the below guidance so that SCH C is not generated, and you should expect to be audited on the income about 24-36 months after the IRS accepts your e-filed return. So long as you can prove to the IRS it's not SE income, this won't be a problem for you. But it may be a problem for whatever person or entity that incorrectly issued you the 1099-MISC.
Reporting 1099-MISC (box 3 or box 7) that is not self-employment income
Under the Wages & Income tab (or Personal Income tab) scroll down to Other Common Income and elect to start/update Income from form 1099-MISC. Then click YES to indicate you have a 1099-MISC.
Enter the 1099-MISC exactly as printed, and then Continue.
Enter the reason you got this money – be it scholarship, bonus, streaking butt naked across the 50 yard line of the super bowl, whatever. Then continue.
Select None of these apply, then Continue.
Select No, it didn’t involve work….. and Continue.
Select ONLY the tax year for which this specific 1099-MISC was issued. Do not select the year that you received the 1099. Select the year for which the 1099-MISC was issued. Select no other year. Then Continue.
Select No, it didn’t involve an intent to earn money, then Continue.
Select NO, then Continue.
Click the DONE button, and that does it.
