I just did a practice run inputting my daughter’s tax return. I identified the $1,000.00 scholarship reported on the 1099-Misc (box 7) and reported no other source of income and/or dividends/etc.; it resulted in zero tax liability for Federal or State.
Since there is no tax liability, do I proceed to file her tax return with the 1099-misc (box 7)? Do you foresee anything negative with the IRS/State? I did email the non-profit and inquired if they could correct the 1099-misc and identify box 3 instead. Thank you.
