You are correct that you do need to pay income taxes on your grant income. However,
although you must pay ordinary income taxes on this income, you do
not have to pay Social Security and Medicare taxes on it as well, as you
would if this
were instead self-employment income, or W-2 wage income.
Thus, if you are entering this income as a 1099-MISC item, you may be inadvertently generating Form 1040, Schedule C (self-employment), along with an accompanying Schedule SE, which is (erroneously) calculating self-employment taxes. Instead, let's redirect you to the "correct" way to enter this particular income item on you tax return.
Academic institutions, research facilities,
and certain government
agencies will often report grant, fellowship, and stipend income in various or nonstandard ways, especially at the graduate
and postdoctoral levels. It's certainly not an
uncommon occurrence; but yes, the grant you received is
definitely considered taxable compensation. As such, you do (legally) need to
declare it and report the information on your
income tax return.
This can be accomplished in the TurboTax
program, both in the online (web-based) software as well as in the
desktop versions of the program.
The mechanical steps to do so
are outlined at the following AnswerXchange post from a few years ago.
Ignore the fact that the income was shown on a Form 1099-MISC (as this
can lead you into the wrong area of TurboTax), and instead follow the
steps outlined here:
https://ttlc.intuit.com/questions/2638576-how-to-report-a-fellowship-stipendThose general processes remain accurate for the current (2016) tax year of the TurboTax program (
i.e., either of those described will work just the same).
Both
as a test of
this, and as demonstrable proof for this answer, I ran a (hypothetical) stipend of $3,000 through the federal tax program. In fact, I did it
in both of the ways described on that other post, and the
results came out just as expected, without any errors present. (Please
see the attached screen-capture image for a visual aid; simply click to
open.) As desired, the notation "SCH" appeared on Line 7 of Form 1040,
and the $3,000 test amount was added to taxable wages.
I have
full confidence that this method will work for your tax return, too.
Just substitute the actual grant income total you have for the
$3,000 used in the
demonstration example. The good news is that, as we noted above, while your fellowship income is
taxable as ordinary income, at least you do not have to pay Social Security and
Medicare taxes on it, as you would if the income were alternatively
taxed as ordinary W-2 wages, or as self-employment income.
Thank you for asking this important question, and good luck with your graduate studies.
