Instead of entering as income, at the 1099-NEC screen, In TurboTax (TT), enter at:
Federal Taxes Tab (Personal for H&B version)
Deductions & Credits
-Scroll down to:
--Education
--Education Expenses
After entering your 1098-T (if you don't have a 1098-T, answer that you qualify for an exception). That will eventually get you to a screen to enter scholarships not shown on a 1098-T. When asked if the scholarship was used for room and board, answer yes. When asked how much of the scholarship was used for room and board, enter the entire amount of the 1099-NEC. That will make it taxable. It will go on line 1 of form 1040 with the notation SCH (starting in 2022, line 8r of Schedule 1)
This next steps are optional (and in addition to entering it as scholarship). There's a chance the IRS computers will not match the 1099-NEC to the Scholarship income. If you want to try to ward that off, do this:
Enter the 1099-NEC at the 1099-NEC screen.
On the next screen Describe what the payment was for (Scholarship on 1099-NEC)
On the next screen select "none of these apply"
On the next screen select "No it didn't involve work like my main job"
On the next screen select "I got it in 2020" ONLY
On the next screen select No, it didn't involve intent to earn money
TT will put the amount on line 8z of Schedule 1 as other income
Then enter a line 8 deduction, for the same amount. In TurboTax (TT), enter at:
- Federal Taxes tab
- Wages & Income
Scroll down to:
-Less Common Income
-Misc Income, 1099-A, 1099-C
- On the next screen, choose – Other reportable income - Answer yes to Any other Taxable Income -On the next screen, Enter the number with a minus sign (-) in front. Briefly explain at description (1099-NEC reported as Scholarship income)
