My child received a 1099-misc for Univeristy Research work - Earned not unearned

[rbierman]

My child got a w2 from her university for EMT work, they also received a 1099-misc for research work.

When I am doing their return, I marked the 1099-Misc (box 3 income) as Other Income (it is not schedule C).  But it marks it as unearned include, limits the standard deduction based on the W2 and the combined income and then brings up an 8615.   TT is reporting it on line 1z of Schedule 1 rather than 1h of 1040.

How do I get this to show as earned income that avoids the 8615 and limitation on the standard deduction.?

[KrisD15]

According to the IRS, Form 1099-MISC is not to be used for reporting scholarship income. 

"Lines 1a through 1z on Forms 1040 and 1040-SR. Beginning in 2022, line 1 was expanded and there are new lines 1a through 1z. Some amounts that in prior years were reported on Form 1040, and some amounts reported on Form1040-SR, are now reported on Schedule 1.
• Scholarships and fellowship grants are now reported on Schedule 1, line 8r." 
 

Scholarships had been listed on Form 1040 line 1h, but now are listed on Schedule 1 Line 8r. "Other Income" is listed on Schedule 1 line 8z.

Income on Form 1099-MISC can be listed as "Other Income" on Schedule 1 line 8z or as Self-Employed income reported on Schedule C. 

To be Earned income, the 1099-MISC would need to be reported as Self-Employment income. 

To be reported as a scholarship, the 1099-MISC would need to be entered, "backed out" and then the scholarship amount entered again as scholarship income in the Education Section under Deductions & Credits, and you would need proof of this adjustment if the IRS questioned it. You would need to prove that the scholarship was incorrectly reported on Form 1099-MISC.