I wasn't interested in the earned income credit. The original question did not mention it either. I posted my response in case the original poster was in a similar situation as my teenager: worked at the National Institutes of Health assisting researchers. My teenager worked a set amount of hours each week for NIH and was paid monthly under a fellowship stipend. My teenager also worked at a second job that was reported on a W-2. She entered the W-2 information from the second job on TurboTax in the W-2 fields. She initially entered the taxable fellowship payments from NIH, reported on 1099-G, under Other 1099-G Income in TurboTax. But, TurboTax showed she owed federal tax. That doesn't make sense as she only earned a few thousand dollars in 2018 and had taxes withheld from her wages from the second job. TurboTax seems to have shown federal tax due because her standard deduction was calculated to be less than her total income, because TurboTax did not include her fellowship stipend as earned income.
We found the IRS's Tax Topic No. 421 which seems to be on point. It states (emphasis added): "
How to Report
Generally, you report any portion of a scholarship, a fellowship grant, or other grant that you must include in gross income as follows:
- If filing Form 1040.pdf, include the taxable portion in the total amount reported on the "Wages, salaries, tips" line of your tax return. If the taxable amount wasn't reported on Form W-2, enter "SCH" along with the taxable amount in the space to the left of the "Wages, salaries, tips" line. If filing Form 1040NR.pdf or Form 1040NR-EZ.pdf, report the taxable amount on the "Scholarship and fellowship grants" line."
Since TurboTax does not seem to include 1099-G income on the "Wages. salaries, tips" line of the federal return, the only way that we could figure out to force the 1099-G income on that wages line of the tax return is to enter the stipend income in TurboTax's W-2 form.
If you have a different understanding, we'd love to learn.
