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Hi, I received a stipend for living expenses from an NIH Graduate fellowship that was not reported by my University's W-2. Is it taxable income? I submitted a 4852 to be safe and paid a lot of tax. Should I amend it?

 
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Hi, I received a stipend for living expenses from an NIH Graduate fellowship that was not reported by my University's W-2. Is it taxable income? I submitted a 4852 to be safe and paid a lot of tax. Should I amend it?

It is taxable but form 4852 was incorrect.  You are not an employee and do not need to receive a W-2. Because you are a student, your income is not considered "earned" income and is exempt from social security and medicare withholding.  You still owe state and federal income tax on the part of the stipend that is more than tuition and required fees, but you don't owe the additional 7.65% tax you charged yourself by using the substitute W-2 form.

You should file an amended return.

I believe that if you follow the interview for education expenses (which includes the 1098-T form), you will eventually be asked if you received a scholarship or fellowship that was more than the value of tuition and fees.  That is the correct place to add your stipend.  The income is added to form 1040 line 7 with "SCH" noted in the margin ("scholarship").  Then, go into the W-2 section and delete the job.  You should end up being charged income tax but not social security and medicare tax.  You may also lose eligibility for certain tax benefits that require earned income, since you will no longer have earned income.

Amend https://ttlc.intuit.com/replies/3288565


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