Q. I am still finding scholarship or other income from box 3 being unearned?
Yes. If you enter it as box 3, 1099-Misc income it will end up as either unearned "other income" (line 8z Schedule 1) or self employment income (Schedule C) depending on how you respond to the follow up interview.
To get it treated as hybrid stipend-scholarship income, it must be reported on line 8r of Schedule 1. To get it there, you must enter it in the Educational expenses-Scholarships section, under deductions and credits. Do not enter it in the 1099-MISC section under Wages and income.
If you're concerned about the 1099-Misc not showing up on the tax forms, there's a workaround for that. But, it's not necessary.
Report the scholarship income, on Schedule 1, line 8r. Enter as previously described.
Then also report the 1099-Misc as other income, line 8z, Schedule 1 income (enter in TurboTax at the 1099-Misc screen). Then enter an offsetting line 8z 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, e.g. "1099-Misc reported as scholarship"
