Yes, report the fellowship/stipend in the "Educational Expenses and Scholarships (1098-T) Scholarships/Grants (for all schools)" as "Other Scholarship/Grants/Fellowships".
Q. and as long as the total scholarships she has reported on her 1098T (box 5) and this Mayo 1099Misc is less than the amount reported in Box1 of her 1098T, then the fellowship is not taxable?
A. No. You cannot apply/allocate the Mayo fellowship to tuition. It must be reported as taxable income.*
If you have a 1098-T, one of the follow-up questions will be do you have any scholarships not shown on the 1098-T. Enter the fellowship/stipend there. You will have to go thru the whole education interview to get to the scholarship screen. At the scholarship screen, enter the amount of the fellowship. When asked if any was used for room and board, answer yes. Then enter the amount you want to be taxable (usually all of it), in the pop up box. R&B are not "qualified educational expenses". So, this is how you tell TT that it is taxable. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B. This will put it on line 8r of Schedule 1.
Q. How do I tell the IRS that the 1099Misc is reported in the Educational Summary Section?
A. Basically, you don't. ** Their computers will most likely match the amount on Schedule 1 to the 1099-Misc and there won't be a problem. If you hear from the IRS, it's easily explained.
*Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $14,600 filing requirement (2024) and the dependent standard deduction calculation (earned income + $450). It is not earned income for the kiddie tax and other purposes (e.g. EIC). For grad students and post grad fellows, scholarship, stipend and fellowship income is earned income ("compensation") for IRA contributions.
**There is a way to cover that concern. After entering as scholarship, you re-enter it as other income at the 1099-Misc screen. Then you enter it a third time , except as a negative number. That will put two offsetting entries on line 8z of Schedule 1.
