But there's also a section for scholarship/fellowships. Depending on where the number is entered, my tax liability changes by over 5000 bucks. Figured it would be worth asking.......
It shouldn't change if you do it right.
A graduate fellowship is not self-employment income, you are a student in training, not a business person trying to make a profit. If you entered the income as "other uncommon income" and answered the testing questions correctly, it would show up as "other income" and you would not be charged self employment tax.
However, the correct way to enter the income is to use the Education expense interview on the deductions and credits page. After entering the 1098-T (this should not be taxable, if the stipend just equals your tuition), keep going, and there should be additional questions about scholarships and fellowships. Your stipend is not subject to social security or medicare tax or self-employment tax but it is subject to regular income tax.
Also worth noting, that because this is not income earned from working, it is not "earned income" and does not qualify you for EIC, or certain other tax provisions that require earned income. Reporting it incorrectly as self-employment income might make you appear eligible for those credits. So entering the income the wrong way could create a swing in either the plus or minus direction, depending on SE tax vs. credits. But the correct answer is to enter it as a taxable scholarship or fellowship that is more than your qualified tuition expenses.
sorry - I should have read your entire question.
what did you use the money for? if the fellowship was used for tuition, it is non-taxable.
what is in Box 1 and Box 5 of form 1098T?
As Champ Opus 17 explains above - Any amount of fellowship you received in excess of your qualified education expenses should be reported as taxable income on your tax return. You can add the amount that was not reported on a W-2, 1099, or 1098-T as additional scholarship income when you enter your education expenses. This way it will be reported on Line 1 (Wages) with a SCH notation on your Form 1040. Although, as stated above, it is not considered earned income.
See IRS topic - how to report taxable scholarships and fellowships.
Why did you not get a 1099-Misc, W-2 or the fellowship was not included in box 5 of your 1098-T. That is unusual, what's going on here?
One possible explanation is that it is classified as tuition waiver or reduction, available to graduate student research and teaching assistants, and which is not taxable. See: https://www.aau.edu/sites/default/files/AAU%20Files/Key%20Issues/Taxation%20%26%20Finance/Section-117-d-Qualified-Tuition-Reduction-FINAL.pdf
I think some colleges struggle with proper reporting. Stipends for graduate students in excess of the tuition waiver should probably be reported in box 5 of the 1098–T, but I have also seen them reported in box 3 of 1099–MISC. This is also not the first person to post on this forum (or the old forum) who didn’t get any forms at all.
I saw some of the prior posts, but was struggling with how to access the correct field in which to enter this in the newest turbotax user interface, since it didn't match a "form". Thanks y'all for helping me figure it out.
Hi,
I have the same problem. The university does not provide W-2 or any other form for my stipend (taxable fellowship used for non-educational expenses).
However, I can not find anywhere to enter the amount of my income from the fellowship in Turbotax.
Do you have any idea where should I enter the information?
Thanks
In the education expenses interview, you will be asked if you had any additional scholarships , not shown on a 1098-T, W-2 1099. Enter there.
FYI to the turbo tax pple - Post graduate fellowships are not always utilized by a student. Please update your questions so that the amount can be added on the wages line as SCHO for those that were not working on a degree in the calendar year! There is no 1099 or 1098T form for this type of fellowship. The person earning the money was not a student so they answer no to the student questions.
@janetlo. The correct way to enter the taxable portion of your fellowship income is to use the Deduction & Credits section of TurboTax. Rather than selecting a specific topic under the topic heading Education, select instead "Visit All." When you select Visit All, you will be asked questions about education expenses. After the page Tell Us About Your Education Plans, you will see your Education Summary page. Because it appears you have already starting entering information in this section, select Edit, and make whatever changes you need to make.
After entering some basic information on just a few pages in this section, we were able to enter in our test return $1,000 of a taxable fellowship grant on line 1, Form 1040, with the words SCH on that line.
I do not see a Visit All option under Deductions & Credits -> Education. After I state I didn't receive a 1098 and qualify for an exception from receiving one because the university isn't required to send one, it asks the name of the school I attended. I wasn't a student, I didn't have to pay tuition, I received a fellowship without expectation of specific job duties. I don't see anywhere to include it with the SCH note on line 1 either. The university claims they are not required to report anything. They have hundreds of people like me who receive such fellowships. Any tips?
@emprice99 Good, you know it goes on line 1 of form 1040 with the SCH notation.
Even though you didn't "go to school", you need to enter it at Education: Expenses and Scholarships section of TT, to get it on line 1 with the SCH notation.
Thanks for the confirmation. Unfortunately I mistakenly entered it into Miscellaneous income in addition to the Education: Expenses and Scholarships section, and now I can't delete it from the misc section, so it is counting that income twice. When I go to edit/add in the misc section I can't see any way to remove it. Is there any possibility of getting rid of that entry without having to clear the entire form and redo it?
You may be able to delete the Other Income form if you only made that one entry on it.
A simple way to delete forms in TurboTax online is to use the Tax Tools menu option, which is on your left menu bar when you are working in your program. Then, choose Tools and then Delete a form. Look for a worksheet called Other Income and delete it.
If you are working in the download TurboTax program, use the Forms Mode on your menu bar to bring up the form you want to delete, then choose the Delete Form option at the bottom of the form.
I did delete the other income form, but that didn't fix the problem. I had to go back to revisit misc income and then begin to enter a new line of misc income before I was able to see the line of income I'd mistakenly entered and delete it. This wasn't intuitive or clear at all, and it appears I'm not the only one with this problem with the misc income section. I hope TT makes it clearer!
If the excess scholarship was entered in the Education Section under Deductions & Credits, that's where you would need to go in order to edit the entry.
I have a similar situation where my university informed me that my graduate fellowship was taxable, but the university doesn't issue any tax documents related to the fellowship itself (e.g. no W-2, etc.).
I am still confused about how to enter into TurboTax. I tried entering into the Deductions and Credits section (the fellowship amount is listed on my 1098-T), but then when I got to the State return it looks like TurboTax populated the fellowship amount as a non-taxable scholarship in my State information, so I am unclear if by entering the amount into Deductions and Credits that it will be seen as taxable income (which according to my university it should be).
Can anyone help me to make sure I'm doing this correctly? Should I also add it as Less Common Income in the wages and income section to make sure it's taxed?
Sorry, I am so confused on how to enter this into TurboTax's system!
You say "the university doesn't issue any tax documents related to the fellowship itself (e.g. no W-2, etc.)" then you say "the fellowship amount is listed on my 1098-T". If it's in box 5 of the 1098-T, that is a reporting tax document and that is how it is entered in TurboTax (TT). When TT sees that there is no offsetting tuition (in box 1), it will treat the box 5 amount as scholarship. It will show on line 1 of form 1040 with the notation SCH to the left. Anything on line 1 of the federal 1040 transfers to state.
What is your state? Most states tax scholarship (if the feds do), but some allow a deduction. You say " it looks like TurboTax populated the fellowship amount as a non-taxable scholarship in my State information". Where is that showing up.
Thanks for your quick response and follow-up questions!
Re: 1098-T thank you for this input. On my 1098-T there is a tuition amount listed in box 1, so would this impact how the fellowship money listed in box 5 is treated by TurboTax? The money issued for the fellowship was used by me to pay for tuition, but the department that awarded it to me explicitly stated that the fellowship was taxable and I needed to report it as such on my taxes.
The state is Minnesota. Again, the department that awarded me the fellowship stated that it was taxable at the federal and state level.
Below is a screenshot of where TT is auto-populating (in the state return section) a field (see red box/arrow) dedicated for non-taxable scholarships, however the fellowship money shouldn't be populating there since it was taxable. Not sure why TT is assuming it's non-taxable on the state return-- therefore I have been concerned that TT is also processing it as non-taxable on the federal after I entered the data in the 1098-T form screen there.
Any input on this would be helpful! I want to get this right and make sure TT is viewing this as taxable so it doesn't cause me issues later.
Q. The department that awarded it to me explicitly stated that the fellowship was taxable and I needed to report it as such on my taxes.
A. Essentially you have a "loop hole". Scholarship is scholarship and as long as there are sufficient qualifying expenses, the scholarship is tax free, whether the expenses were actually paid by that specific scholarship or not. But, if that makes you uncomfortable, do this: you will be asked if any of the scholarship was used for room and board. Answer yes and enter the taxable amount. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B. That's just the step needed, in TT, to make it taxable.
I'm not familiar with MN rules or software. But, my state (OH) has a similar rule and the TT Ohio software asks how much is not taxable. It prepopulates that box. So, if the amount isn't right, you have to change it.
We may want to clarify here. @andrewpdupuis originally said this was a "graduate fellowship." In many cases (especially STEM fields), the graduate student receives a tuition waiver plus a stipend. In that case, as far as I know, the entire stipend is taxable income. Does that change your answer? (I haven't practiced with this section of the program recently.)
@Opus 17 Not really, Scholarship is scholarship and box 5 is box 5.
But, again, the poster has the option of making it taxable (I wouldn't).