You're right, your parents should never have issued you a 1099 for your college tuition. You can:
- Just hold onto it and not report it, and when the IRS asks you about it explain that this was not taxable income, and describe what happened.
- Report the income, then take a corresponding deduction for it. First, report the 1099, and in the questions that follow say it was not for work like your regular job and that it did not involve an attempt to earn money. Then, go back to Wages and Income, and scroll down to Less Common Income. Click on Miscellaneous Income (all the way at the bottom of the screen), then Other Reportable Income. Say you received other income, then on the screen Other Taxable Income enter a negative amount for the tuition. So if the 1099 was for $5000, enter -5000 in this section. That will zero out the 1099, and yet you will have reported it.
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