Graduate Student Fellowship with no income reported on W-2, and no 1099-MISC - how to report?

[jaybird4522]

I am a graduate student with a fellowship paid by the university.  I am working towards a PhD.  My university sent me a W-2 and a 1098-T, but they did not send me a 1099-MISC.

In my W-2, there are no wages, income tax withheld, social security reported.  There is only 12a Code DD "cost of employer sponsored healthcare" reported.

In my 1098-T, there are two numbers reported:

-Box 1: Payments for qualified tuition

-Box 5: Scholarships or grants

Box 8 and 9 are marked Yes, as I am a full-time graduate student.

Some of my Fellowship goes to pay my tuition, but some goes to pay me a stipend to perform research, as indicated in the 1098-T.  I'm assuming that the amount of the stipend is taxable?  If so, how do I report it through Turbo Tax?  Do I need to submit an SS-8 Form?  Or can I just report it through 'Other Miscellaneous Income'?

[Bsch4477]

You do not have to report the W-2.  If scholarship (Box 5) is greater than tuition (Box1) and the difference is greater than $12,200, report as scholarship income. If the difference is less than $12,200 you don’t have to file if you have no other income. 

[Hal_Al]

You do Not file form SS-8, for several reasons. Students working for the college are exempt from FICA.  Reporting it as Scholarship, not wages, is the correct way.

[KathrynG3 · Accepted solution]

Based on @Hal_Al and @Bsch4477 's insights, I have edited my answer accordingly:

First, regarding your W-2, it is not reportable and does not need to be included in your return, as Bsch4477 stated.

What is Code DD in Box 12 of my W-2?

Second, regarding your fellowship:

Enter Form 1098-T exactly as received. After posting, TurboTax will ask for additional details.

• The next screen will ask: Did Taxpayer's Aid Include Amounts Not Awarded for 2019 Expenses? 
  • This is for costs paid in one year for a school term in a different year.
• Did Taxpayer Pay for Room and Board with a Scholarship or Grant? 
  • This refers to living expenses.
    • Answer Yes, entering the excess amount received over tuition.

For any excess stipend over the amount of tuition, if Form 1098-T was not received, enter in TurboTax following these steps:

1. From the left menu, select Federal
2. Wages & Income scroll all the way down to Less Common Income and click Show More
3. Select the last listed option for Miscellaneous Income 1099-A, 1099-C, click Start
4. Next, select the last listed option Other Reportable Income
5. Did you receive any other taxable income, click Yes
6. Other Taxable Income: Enter your description and the amount and click Continue and Done.

Click the links for more details:

Are my scholarships, fellowships, or grants taxable?

How do I enter Form 1098-T?

2019 IRS Publication 970 beginning on page 5

and also, see page 89: Scholarships and fellowship grants.

• Expenses for tuition and fees required to enroll at or attend an eligible educational institution, and
• course-related expenses, such as
  • fees,
  • books,
  • supplies, and
  • equipment

that are required for the courses at the eligible educational institution.

Course-related items must be required of all students in the course of instruction.

IRS Tax Benefits for Education Center

Student Exception to Social Security and Medicare Taxes: explains why your fellowship is not subject to self-employment tax. Therefore, it must be reported as less common income.

Congratulations on your fellowship and PhD work!

[Edited 3/28/2020 | 3:58 PM PST]

@jaybird4522 

[Hal_Al]

Do not report it as "other Income", particularly if you are someone else's dependent.  That will put it on line 7a of form 1040 (via Schedule 1) instead of line 1 of form 1040; and that affects your standard deduction calculation.

Instead, enter taxable scholarship at the 1098-T screen under Deductions and Credits (not income).

 If scholarship (Box 5) is greater than tuition (Box1)  report as scholarship income. If your total income, including the taxable portion of the scholarship is less than $12,200 you don’t have to file a tax return.

[jaybird4522]

I am not someone else's dependent.  I am paying for my education on my own.  My total income was more than $12,200, as I was working another job.  I have a separate W-2 that reflects this income.

To clarify, you are saying that I only need to report the 1098-T on the Deductions & Credits section of Turbo Tax, and I don't need to report it anywhere else?

What does 'taxable scholarship' mean?  Is that the part that asks 'Was any of the scholarship income not designated to pay 2019 education expenses?'

[jaybird4522]

Thank you!

To clarify, does that mean I can delete this W-2 from my tax return within Turbo Tax?  That sort of makes sense, since it only has Box DD filled out, but I just want to confirm.

And then, if you don't mind confirming, the Fellowship covers two portions: Tuition + a "living stipend".  The "living stipend" portion is not for education expenses, so it appears to be taxable.  Therefore, I will add it under Other Reportable Income.  Does that sound correct to you?

[Bsch4477]

Was any of the scholarship income not designated to pay 2019 education expenses?'  Answer yes and that amount would be the difference between your box 1 and 5.  That is your scholarship income. 

Yes. Do not enter that W-2.

[jaybird4522]

Yes, the Fellowship covers two portions: Tuition + a "living stipend".  The "living stipend" portion is not designated to pay 2019 education expenses.  It is designated for food, rent, and anything else I need to live while a full-time student.  I believe that, according to these answers, the "living stipend" needs to be reported as income.

The remaining question is: where do I report this income in my tax forms?  There seem to be some conflicting responses on this.  If I just enter my 1098-T information under Deductions and Credits, is that sufficient?  There is a question that asks: 'How much of the $x received in scholarships, fellowships, grants, or other aid was not designated for 2019 expenses?'.  If I fill that in with my the amount of Box5-Box1, which is equal to the "living stipend" portion of my Fellowship, then is that sufficient for reporting that income?  Or, do I also need to go down to Other Income and report that value as 'Other Taxable Income', as suggested by KathrynG3?

[Hal_Al]

Since you are not claimed as a dependent, it can go either place (line 1 of form 1040 with the SCH notation or line 8 of Schedule 1, other income).  Either way it is taxed as ordinary income (not earned income).

 Q. If I just enter my 1098-T information under Deductions and Credits, is that sufficient? 

A. Yes, that puts in on line 1 o form 1040.

Q. There is a question that asks: 'How much of the $x received in scholarships, fellowships, grants, or other aid was not designated for 2019 expenses?'.

A. Answer no.  that question is for when the scholarship year doesn't match the expenses year. The next screen will ask how much was used for room & board. Put the  Box5-Box1 amount there. That sufficient for reporting that income. 

Q. Do I also need to go down to Other Income and report that value as 'Other Taxable Income', as suggested by KathrynG3?

A. No. That is "instead of" not "in addition to"

[jaybird4522]

I think I got it now.  Thank you, @Hal_Al , @Bsch4477 , and @KathrynG3 - I really appreciate all the help!

[KathrynG3]

You're welcome!

[slgtax]

how do you enter graduate school fellowship on line 1 with SCH designation (no W-2, 1099-M, or 1098-T provided by school)? Do you enter as W-2 and enter SCH under box 14 or under education section

[Hal_Al]

In TurboTax (TT), enter at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

-Scroll down to:

--Education

  --Education Expenses

Even without a 1098-T, you will reach a screen to enter scholarships.  TT will enter om line 1 , of form 1040, with the SCH notation, the scholarship amount that exceed you qualified expenses.  If you already know what that amount is, you can just enter it to simplify the process.  Do not try to enter scholarship, in the income section on TT online

[aiturra]

Hi,

All this information was super helpful as I am in a similar situation. I am just wondering how to report any withheld federal and state taxes for my stipend? I got a w-2 showing only the withheld federal and state taxes, but the income box says $0. How do I report my withholding?

Currently I have my stipend fellowship in the education deduction area of 1098t (As stated in above answers, I answered no for the question asking about education expenses not in 2020, and yes on the room and board question and entered my stipend there). But this doesn't give me the option of including my withheld taxes. So where do I put this in? 

Thanks so much!