<p>This is a good discussion and from my research including this thread I plan to simply add the REU 1099 Misc amnount to line 7 (Wages, tips,…) and let the software figure out what should have been taken out. This will increase the standard deduction (SD) and probably result in a much lower tax lianility or possibly small refund. Even the IRS pubs and court rulings mentioned and documented it sounds like REU colleges don’t really have a way to report tax free / grant money to students so they use the 1099 . It simply makes no sense that if a student makes the same amount year to year with one year being all reported as W2 income and the second year being part W2 and pure additional income (1099Misc) that the latter would produce a substantial tax liability simply because the 1099 doesn not calculate the proper SD, unless you hope the IRS reads the footnotes properly. I say go with line 7. Great discussion. </p>