Hi everyone!
Last week I posted a question about how to handle my daughter's REU Stipend. ( REU Internship Stipend) One of the things I've been hearing from other sources is that based on her income, she shouldn't have to pay any taxes on it. However, when I enter all the forms on TurboTax, she gets hit hard.
Here's what I have:
*Although the stipend was reported in the 1098-T from her university in box 5 (Scholarships/Grants), it was for living expenses during her research time over the summer. (The university reports it because the REU was part of the curriculum and therefore a "class.")
*The research lab also furnished a 1099-MISC reporting the amount
*As a dependent, her standard deduction is supposed to be her earned income plus +$350 (2021 tax year)
*The stipend was not meant to be used towards tuition and was essentially payment for the research work. Therefore I'm told it should be considered earned income.
*However, in TurboTax, the stipend is not considered in the standard deduction calculation when entered on the 1099-MISC section, and therefore results in a large tax bill.
My questions:
1. Is the above correct that the stipend is earned income and should be included in calculating her standard deduction?
2. How do I get TurboTax to agree on that when I enter the 1099-Misc?
Thanks in advance for any help on this!
