URGENT -- I have 1099 MISC income (box 3) reported for summer internship (stipend) completed by son (NON-DEPENDENT) AWAY from his university. QUESTION -- How to report this inc, in TT such that it is EARNED income (eligible for ROTH IRA contributions)?
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Don't enter it in the income section (don't enter it where it says enter a 1099-misc).
Enter at Educational Expenses and Scholarships, under Deductions and credits .
After answering no to having a 1098-T*, answer yes to qualifying for an exception (that gets you to the entry screens). You will have to go thru the whole education interview to get to the scholarship screen. At the scholarship screen, enter the amount of the grant. When asked if any was used for room and board, answer yes. Then enter the amount you want to be taxable (usually all of it), in the pop up box. R&B are not "qualified educational expenses". So, this is how you tell TT that it is taxable. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B. This will put it on line 8r of Schedule 1 (this line is new for 2022-3). This makes it "taxable scholarship".**
*If you do have a 1098-T, one of the follow-up questions will be do you have any scholarships not shown on the 1098-T. Enter the additional scholarship/stipend there.
**There appears to be new screen in the IRA contributions section, titled "How much of the taxable scholarship was for graduate or post doctoral studies?" Be sure you filled in an amount there (usually all of the taxable scholarship).
Al Hal --- I can see why you are Level 15, that was a very elegant solution to my issue! It seems that all is good! One follow up question: please confirm that I am not going to find myself into trouble for "ignoring" the TT 1099 MISC section and instead inputting this data within Education/scholarship section? I noted within the education section, the TT narrative says NOT to input data there from W-2 or 1099 MISC forms. Thank you again!
There are no guarantees with the IRS, but since the 1099-NEC has replaced the 1099-MISC for "non employee compensation", the IRS computer matching appears to be happy that 1099-Misc shows up anywhere on your tax forms.
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