@john8791 wrote:
@Opus 17 I appreciate your input. In the case of my wife, the stipend check was just over $900, just a few $100 over the $600 to even require that they hand out a 1099.
I have read the IRS definition of independent contractor
and it says:
You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.
It seems that the case may be reasonably argued that this is not self employment income, but is it worth the hassle with dealing with the IRS? It's a shame that a program designed to help teachers is causing so much hassle and possible extra expense from having to consult with a CPA.
Your wife is clearly an employee with respect to the school district that issues a W-2. The question is, what is her relationship with the payor of this grant? If the grant payor used a 1099-NEC, then they either consider this "compensation" for services performed, or they didn't actually research it and used the path of least resistance. This payment might not be compensation if she performed no services for the payor, but the fact that it was reported on a 1099-NEC means that if you don't report it as self-employment income, you will get a letter from the IRS. This letter will be automatic and sent by a computer with no human review. Your reply is the first time that your situation will be considered by a human. So if you decide to report this as "other" income not self-employment, then you will want to be prepared to write a really convincing reply letter to the IRS with copies of documents proving your case. Good luck.
