1099-NEC Box 1 amount also included in 1098-T Box 5

[RMDavoidance]

Good afternoon.  Thanks in advance for your helpful answers/suggestions.

My daughter received a 1098-T from her university. She is a graduate student. She gets a stipend for her graduate work. In addition to her regular lab work, she taught a class on her professors behalf in another university for which she was paid $1500 and this amount is included in Box 5 of the 1098-T.  This entry in 1098-T has additional information and is marked as FELLOWSHIPS, TRAINEESHIPS &
STIPENDS. Few days ago, she received a 1099-NEC for the same amount in Box 1.  How does she avoid double taxation for the same amount ( $1500) listed in 2 different forms? 

Thanks

[MarilynG1]

The entry in Box 5 on the 1098-T indicates Scholarship received, so it is not necessarily taxable income, unless it exceeds the Tuition amount in Box 1. Otherwise, it reduces the Tuition eligible for an Education Credit.  If she has no Education Expenses to claim, she doesn't need to enter the 1098-T in her return. 

In that case, since she actually got paid $1500 for her teaching, the 1099-NEC is appropriate.  She can indicate that it was a one-time payment, and not self-employment income. 

So she either uses the $1500 against Education Expenses (as a scholarship) or reports it as Miscellaneous income via the 1099-NEC, whichever applies to her situation. 

Here's more info on Form 1098-T. 

[RMDavoidance]

Thank you for your quick response. Box 5 ( Scholarship) amount is much greater than Box 1 ( Tuition) ( $63746 vs $17896) so there is a taxable income.  You mention to indicate the 1099-NEC amount of $1500 as one time payment. Is this the "This is not money earned as an employee or self-employed individual, it is from a sporadic activity" option on the 1099-NEC set of screens ? 

I read another thread where it was suggested to enter a negative number ( -$1500) in the Less Income -> Other Reportable Income path and to enter a description of "1099-NEC amount duplicated in box 5 of 1098-T" and a negative 1500 for the Amount.  (https://ttlc.intuit.com/community/taxes/discussion/1099-nec-scholarship-1098-t-1099-q/01/2932965)   Should I do the same in our case ?

[AmyC]

The 1099-NEC is a form the IRS computer will be looking for on her return. I would use the NEC. The 1098-T has adjustments for other expenses, supplies, etc so you can just subtract out this doubled income. Then make good notes and keep them with the tax folder for a few years. The IRS Tax Forum stated this summer that they are running  an average of 4 years behind on audits.

You can subtract the NEC back out and leave the income in the 1098-T but that adds another entry to the return that you can avoid.