I am a grad student, and am supported by a living stipend from a government supported fellowship program. The contracted company managing this program sent everyone MISC-1099 forms, and reported the stipend payments in box 7.
The tax program I'm using (FreeTaxUSA) requires me to fill out information for Schedule C if I enter the 1099-MISC as I received it. However, that subjects me to SE taxes, which is incorrect, as per this document: https://www.irs.gov/pub/irs-pdf/p970.pdf.
If I simply don't report the MISC-1099 form, but do report the income (correctly - as a scholarship in 'other income'), then I'm afraid the IRS will question why I didn't report the MISC-1099.
How do I deal with this?
(I've seen at least one potential way forward, but it seems a little questionable to me. I'll post it as an answer below for discussion.)