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APA
Level 1

NRSA T32 Fellowship income and FICA exemption

Hi, I'm a postdoctoral fellow with a NIH T32 training grant that I receive as a monthly stipend. According to IRS (https://www.irs.gov/pub/irs-wd/1117026.pdf), this type of stipend is exempt from medicare and social security taxes (FICA). How can I enter this income as exempt from FICA in Turbotax? This question has been asked 4 times* in the past on the Turbotax forums but none of the answers are correct. Either entered through ''Miscellaneous Income, 1099-A, 1099-C'' or ''Scholarship'' under ''Deductions and Credits'', TurboTax treats this information as a wage and does not treat as exempt from FICA. Is there a way to enter this fellowship exempt from FICA?

 

Previous posts about this issue that do not solve the problem:

https://ttlc.intuit.com/community/taxes/discussion/i-have-a-postdoctoral-fellowship-and-received-a-1...

 

https://ttlc.intuit.com/community/college-education/discussion/t32-nrsa-grant-income/00/416576

 

https://ttlc.intuit.com/community/taxes/discussion/i-have-received-postdoctoral-fellowship-from-nih-...

 

https://ttlc.intuit.com/community/taxes/discussion/i-was-on-a-t32-fellowship-with-last-check-on-july...

12 Replies
Hal_Al
Level 15

NRSA T32 Fellowship income and FICA exemption

How was the income reported? W-2, 1099-Misc (which box), 1098-T or some other way, including not at all?

 

Report the income as scholarship. Enter it in the education section, under education expenses (you'll eventually get to a scholarship screen).

 

Older post referencing entering scholarship at Miscellaneous Income, 1099-A, 1099-C are not valid for current software 

APA
Level 1

NRSA T32 Fellowship income and FICA exemption

I think my question is clear: Either entered through ''Miscellaneous Income, 1099-A, 1099-C'' or ''Scholarship'' under ''Deductions and Credits''TurboTax treats this information as a wage and does not treat as exempt from FICA. Is there a way to enter this fellowship exempt from FICA?

Hal_Al
Level 15

NRSA T32 Fellowship income and FICA exemption

It only appears that TurboTax (TT) is treating it as wages, when entered as scholarship, under education expenses/deductions and credits, because TT  adds the amount to line 1 of form 1040.  But, it also includes the notation "SCH".  That notation keeps it from being subject to FICA.   TT will not generate form 8919 to calculate FICA, as it does when other wages are added to line 1.

audsnends
New Member

NRSA T32 Fellowship income and FICA exemption

I'm running into the same problem. I received a 1099-MISC for a pre-doc T32 grant. Under Deductions and Credits -> Education -> Expenses and Scholarships, I cannot proceed without Form 1098-T. Am I supposed to enter the 1099-MISC form information as a 1098-T?

Thanks for your help!

KrisD15
Employee Tax Expert

NRSA T32 Fellowship income and FICA exemption

 

Click on Wages & Income

Scroll down PAST Self-Employment to "Other Common Income" 

Click Show more

Scroll down to 1099-MISC

Click Start

Enter the 1099-MISC and answer the interview questions carefully. 

Describe the income as an "EDUCATION GRANT"

If applicable, you should be selecting No, not for work No, not to make money and received only in 2020 if this was not self-employment. 

It will be reported as income, but not Self-Employment. 

Enter the 1099-MISC and answer the interview questions carefully. 

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Hal_Al
Level 15

NRSA T32 Fellowship income and FICA exemption

@audsnends 

Scholarships should not be reported on a 1099-Misc. TurboTax aggressively steers you to self employment, because so many 1099-misc are really that.  

 

1099-Misc income (I assume the $ are box 3) is  usually  reported on line 8 of Schedule 1, as "other income".  It is treated as unearned income. 

Enter at the 1099-Miscmscreen

On the next screen Describe what the payment was for

On the next screen select "none of these apply"

On the next screen select "No it didn't involve work like my main job"

On the next screen select "I got it in 2020" ONLY

On the next screen select No, it didn't involve intent to earn money

TT will put the amount on line 8  of Schedule 1 as other income

 

If you can be claimed as somebody's dependent; you (and the IRS) want scholarship income reported on line 1 of form 1040  (with the notation SCH) so it will be treated as earned income for the purposes of calculating the dependent's standard deduction (earned income + $350, but not more than $12,400).

 

To get it there, In TurboTax (TT), enter at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

-Scroll down to:

--Education

  --Education Expenses

After telling it you don't have a 1098-T, answer that you qualify for an exception. That will get you to a screen to enter scholarships not shown on a 1098-T. 

 

This next step is optional (and in addition to the above).  There's a small chance the IRS  computers will not match the 1099-misc to the Scholarship income.  If you want to try to ward that off do this:

Enter the 1099-Misc income as  described above, Reporting  the income as misc line 8, Schedule 1 income (enter in TurboTax at the 1099-Misc screen) .  Then enter a line 8 deduction, for the same amount.  In TurboTax (TT), enter at:
- Federal Taxes tab
 - Wages & Income
Scroll down to:
-Less Common Income
      -Misc Income, 1099-A, 1099-C
       - On the next screen, choose – Other reportable income -  Answer yes to Any other Taxable Income -On the next screen, Enter the number with a minus sign (-) in front.  Briefly explain at description (1099-misc reported as SCH on line1)

 

jeepguy575
New Member

NRSA T32 Fellowship income and FICA exemption

What if this was reported on a W-2? How can you get reimbursement for the FICA that was taken out?

MarilynG1
Employee Tax Expert

NRSA T32 Fellowship income and FICA exemption

@jeepguy575 If the school reported income on a W-2 in Box 1, they are considering that portion of your scholarship to be wages. 

 

You should contact your school to issue you a Corrected W-2  and refund  if you believe FICA was withheld erroneously.

 

Click this link for more info on Student Exception to FICA .

 

 

 

 

 

 

 

 

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thwarted
Level 1

NRSA T32 Fellowship income and FICA exemption

I agree with your observation.  I'm going to see my tax guy, turbotax not helpful on this.

skhanal
New Member

NRSA T32 Fellowship income and FICA exemption

Hi,

Did you figure out where T32 fellowship amount should be entered for FICA exemption while using turbotax? Please advice

AmyC
Employee Tax Expert

NRSA T32 Fellowship income and FICA exemption

@skhanal  Please look through the posts from @Hal_Al as they are correct. The IRS knows the education fellowship is exempt from FICA.

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lulul13
Returning Member

NRSA T32 Fellowship income and FICA exemption

@AmyC I read through @Hal_Al 's post and think I got everything fine so far. My question is how I am supposed to report expense for this income. After I entered the 1099-MISC income as described in @KrisD15's post, I got message that I should enter the expense in business items section but it doesn't seem to know to link it back to the 1099-MISC. The main expense for last year was work from home related, home office and expenses for purchase of supplies. Thank you!

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