You do need to be sure if this is for a Fellowship since that income would be treaded differently than Self-Employment.
According to the IRS:
“A scholarship or fellowship grant is tax free only to the extent:
- It doesn't exceed your qualified education expenses;
- It isn't designated or earmarked for other purposes (such as room and board), and doesn't require (by its terms) that it can't be used for qualified education expenses; and
- It doesn't represent payment for teaching, research, or other services required as a condition for receiving the scholarship.
Exceptions. You don't have to treat as payment for services the part of any scholarship or fellowship grant that represents payment for teaching, research, or other services if you receive the amount under:
- The National Health Service Corps Scholarship Program,
- The Armed Forces Health Professions Scholarship and Financial Assistance Program, or
- A comprehensive student work-learning-service program (as defined in section 448(e) of the Higher Education Act of 1965) operated by a work college (as defined in that section).”
The IRS brought back Form 1099-NEC to indicate that the income is Non-Employee Compensation, in which case the IRS wants it reported as Self-Employment Income. As Self-Employed Income, the Taxpayer can file Schedule C, deduct expenses, but also pay Self-Employment Tax.
A Fellowship is not subject to Self-Employment Tax.
The IRS wants the taxable amount of a Fellowship to be listed on Schedule 1 line 8r.
Do you also have a 1098-T?
The Fellowship amount can be entered in the "Deductions & Credits" section
Education
Expenses and Scholarships
Edit or Add the Student
Edit or Add Scholarships/Grants
Enter the amount in the Other Scholarships/Grants/Fellowships
This will put the amount on Schedule 1 line 8r which is where the IRS wants it, but it will be a total from any other Scholarship income you might need to claim from the 1098-T. The number might not reflect the 1099-NEC specifically.
Alternatively
Enter the 1099-NEC as "Other Income" which will put it on Schedule 1 line 8z. The amount is then taxable, but not subject to FICA tax.
When you report the 1099-NEC in TurboTax, you can go under
Income
Other Common Income
Income from Form 1099-NEC
Type it in
Select "This is not money earned as an employee or self-employed individual..."
This allows the 1099-NEC to be reported on Schedule 1 as Income from 1099-NEC"
Alternatively
You can enter it under
Income
Scroll down to
Miscellaneous Income
Scroll down to
Other reportable income
Click Start
In the Description Box type
Fellowship on 1099-NEC
and the Amount
Continue and click Done
This will again put the amount on Schedule 1 Line 8z, but also include the description of "Fellowship".
To minimize the effect of your refund, you might consider contributing to an IRA.
According to the IRS:
"However, for tax years beginning after 2019, certain non-tuition fellowship and stipend payments not reported to you on Form W-2 are treated as taxable compensation for IRA purposes. These include amounts paid to you to aid you in the pursuit of graduate or postdoctoral study and included in your gross income under the rules discussed in this chapter."
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