Self employed
1099-MISC would have been a better form for the school to use.
Yes, as the conversation has indicated, your situation can be handled several ways.
IRS publications can't cover every possible real life scenario.
The IRS resurrected Form 1099-NEC to clarify contract workers' compensation from miscellaneous income. I think the intent is to get contract workers to pay Self-Employment tax and fund their Social Security Accounts.
I don't see a student's stipend as contract work, therefore I would not file Schedule C, I would not report it as Self-Employment.
That leaves Other Common Income, such as a "one-time thing" or a Scholarship.
Reporting the income as Scholarship has its advantages.
It will be treaded as "Earned Income" in regard to a Dependent's Filing Requirement, contributing to an IRA, and possibly increasing an Earned Income Credit.
On the other hand, the IRS may have their eye open to see that the 1099-NEC is reported.
If the advantages of reporting the 1099-NEC as a Scholarship are not relevant to the student's situation, you can enter the 1099-NEC as a "one-time thing"
"Other Income Section"
"Income from Form 1099-NEC"
Describe it as a Stipend
Select "This is not money earned as an employee or self-employed individual"
This will put the amount on Schedule 1 Line 8z.
If you want it reported as scholarship on Schedule 1 Line 8r, enter it in the Education Section.
If you want to report it as Scholarship, but want to ALSO include the 1099-NEC, do both entries as well as an "Adjusting Entry" to negate the 1099-NEC.
After making both entries listed above, make an additional entry for the 1099-NEC with the amount as a negative number and type something like "Fellowship on NEC reported twice" so the IRS can trace it on your Schedule 1.
