I am a Ph.D. student and my stipend was paid from a 1099-NEC, how should I report this stipend?

[digitaltaxation]

I am a PhD student and usually get my teaching and research stipend through my university, in the form of a W-2. In 2020, I received BOTH a W-2 and a 1099-NEC. This is because my professor I work with left for another university halfway through, and so he has been paid me from the other university. Last year, he gave me a 1099-MISC, while this year the university gave me an 1099-NEC.

Last year, I paid self-employment tax as I was confused and the stipend amount was around $5,000. This year the stipend is much higher at $40,000, and so my potential tax is large. If I reported the 1099-NEC as:

1) Under Less Common Income / Miscellaneous Income 1099-A, 1099-C

2) Selecting "Other reportable income"/"Other Taxable Income"

meaning, reporting it on Schedule 1 Line 8 of Form 1040, would this work for the 1099-NEC? I had asked this last year, but I had a 1099-MISC instead (https://ttlc.intuit.com/community/taxes/discussion/i-am-a-phd-student-my-usual-stipend-via-w-2-low-t...

I greatly appreciate any advice here, thanks!

[digitaltaxation]

I am a PhD student and usually get my teaching and research stipend through my university, in the form of a W-2. In 2020, I received BOTH a W-2 and a 1099-NEC. This is because my professor I work with left for another university halfway through, and so he has been paid me from the other university. Last year, he gave me a 1099-MISC, while this year the university gave me an 1099-NEC.

Last year, I paid self-employment tax as I was confused and the stipend amount was around $5,000. This year the stipend is much higher at $40,000, and so my potential tax is large. If I reported the 1099-NEC as:

1) Under Less Common Income / Miscellaneous Income 1099-A, 1099-C

2) Selecting "Other reportable income"/"Other Taxable Income"

meaning, reporting it on Schedule 1 Line 8 of Form 1040, would this work for the 1099-NEC? I had asked this last year, but I had a 1099-MISC instead (https://ttlc.intuit.com/community/taxes/discussion/i-am-a-phd-student-my-usual-stipend-via-w-2-low-t...

I greatly appreciate any advice here, thanks!

[Hal_Al]

Q. Reporting it on Schedule 1 Line 8 of Form 1040, would this work for the 1099-NEC?

A.  Yes. The 1099-NEC is new this year.  It essentially replaces box 7 on a 1099-MISC.  However you handled box 7 on a 1099-Misc in the past, is how you handle a 1099-NE for 2020. Research stipends for colleges are not subject to either FICA or Self employment tax.

That said, two more things:

1. Expect more IRS scrutiny than in the past, because of the new form. 

2. There's another way of doing it: see https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-1099-nec-graduate-student/01/...

[digitaltaxation]

If I chose the option where I said the 1099-NEC should have been on a W-2, but wasn't (option where it says "My employer reported this extra money on a 1099-NEC but it should have been reported on a W-2."), does this method work to make it not subject to self employment tax? Or would the method I used in the past for box 7 work better at this? Thanks

[Opus 17]

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@digitaltaxation wrote:

If I chose the option where I said the 1099-NEC should have been on a W-2, but wasn't (option where it says "My employer reported this extra money on a 1099-NEC but it should have been reported on a W-2."), does this method work to make it not subject to self employment tax? Or would the method I used in the past for box 7 work better at this? Thanks

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This is a duplicate post and was answered here,

https://ttlc.intuit.com/community/college-education/discussion/re-if-i-received-a-1099-nec-for-a-ph-...

A graduate fellowship is generally NOT earned income.  If the principal investigator relocates and the student stays behind to finish their degree, the student is still a student, even if they are "working" on the PI's project and the PI's new university pays the student's stipend. 

[Opus 17]

@digitaltaxation 

You most likely should NOT have paid self-employment tax on your 2019 tax return and you can probably file an amended return to recover that money.

As discussed in your other post, graduate students are considered students and in training, and their stipend is not considered "compensation" for work performed and is not subject to self-employment tax.  The exception would be if you are performing duties outside your degree requirement (such as, you moonlight washing dishes in someone else's lab to earn extra money, or you get paid extra to TA a class that is not part of your degree requirement).  You don't owe SE tax if your stipend is for your graduate studies because even though you perform duties that seem like the common understanding of "work", you are considered a student.