Basically, this letter from your university or funding agency tells you how much money they’ve given you over the course of the year, but leaves it open to your interpretation whether or not you need to report your income to the IRS or pay income tax.
According to the IRS this letter is telling you
1) you have to file an income tax return and
2) if you received income that you didn’t have to use for qualified tuition and fees, it’s almost certainly going to be taxed.
If you have offsetting education expenses enter the scholarship, stipend or grant as part of your education expenses.
Select Federal Taxes
Select Deductions and Credits
Select Show More at Education
Select Start or Update at Expenses and Scholarships (Form 1098T)
Select Edit at Scholarships/Grants (for all schools
If you do are not a candidate for a degree, or if you do not have offsetting education expenses, the fellowship should be reported as less common income.
• Select Federal Taxes
• Select Wages and Income
• Scroll down to Less Common Income and select Start or Review
• Select Start next to Miscellaneous Income 1099A, 1099C and enter the information provided on your form
https://www.insidehighered.com/blogs/gradhacker/why-it-matters-how-you-are-paid
