1099 MISC Received for scholarship

[hawapani123]

My son got W2 income of $35,550. Received a 1099 MISC for $2,000 which is for scholarship and he used that money to pay for his tution expenses. He also received 1098-T which also got $5500 as scholarship money. His total tution expense are around $35,000. 

I am wondering, how we enter this 1099 MISC $2000 so that it doesn't count as income. 

He file his own taxes. 

Thanks

[ThomasM125 · Accepted solution]

If your son used the scholarship money reported on the Form 1099-MISC for qualifying education expenses, it would not be taxable. He must enter the Form 1099-MISC to report the income then enter a negative amount to income to cancel it out. He should enter the Form 1099-MISC in the Wages and Income section, then Other Common Income, then Income from Form 1099-MISC. Indicate that the income was only earned in 2024, was not associated with his job and he did not have a profit motive to earn the money. That way it will be reported as other income as opposed to self-employment income.

Then make make an adjusting entry to cancel the income out as follows:

1. From the Federal menu in TurboTax find Wages and Income 

2. Find Less Common Income

3. Choose Miscellaneous Income, 1099-A, 1099-C

4. Choose Other Reportable Income

5. Enter a description of the adjustment and the amount as a negative number