1099 MISC

[EJE2O2L]

I am a military member and  ROTC instructor at a major university and am working on an advanced degree at the university.  The university considers me a faculty member and gives me break on tuition and sends me a 1099MISC.    Is this considered income and if so how is it taxed?  Am I required to pay social security and medicare tax on this?  I have heard that $5500 of this is exempt, is this true?  I am not paid any income from the university.

[DanielV01]

The 1099 MISC is income but it is not self employment, so it will only be subject to Federal and State tax and not Self-Employment tax.  In addition, this income can be used towards claiming education tax credits if you qualify for such.

[Hal_Al]

Employer's are allowed to give employees up to $5250 of tuition assistance/reimbursement tax free. This is not applicable in your case, because you are not actually an employee of the university.

As the other answer said, because it's on a 1099-Misc, it's taxable.  It is not wages or self employment, so you do not pay social security and medicare tax, on it. 

Scholarships should not be reported on a 1099-Misc. TurboTax aggressively steers you to self employment, because so many 1099-misc are really that.  

1099-Misc income (I assume the $ are box 3) is  usually  reported on line 8 of Schedule 1, as "other income".  It is treated as unearned income. 

Enter at the 1099-Misc screen

On the next screen Describe what the payment was for

On the next screen select "none of these apply"

On the next screen select "No it didn't involve work like my main job"

On the next screen select "I got it in 2020" ONLY

On the next screen select No, it didn't involve intent to earn money

TT will put the amount on line 8  of Schedule 1 as other income

Because your tuition has effectively been paid with your after tax money, you may count that amount for claiming the Lifetime Learning Credit.

[Opus 17]

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@Hal_Al wrote:

Employer's are allowed to give employees up to $5250 of tuition assistance/reimbursement tax free. This is not applicable in your case, because you are actually an employee of the university.

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I think you meant,

"This is not applicable in your case, because you are not actually an employee of the university."

[Opus 17]

While not disagreeing, I want to clarify something.  Are you getting cash?  Or a tuition rebate?  Or a tuition discount?  Are you also getting a 1098-T?

If you are paying tuition, but less than the full rate, I don't believe the university should be issuing a 1099-MISC. They should only issue a 1098-T showing what you actually paid.

Possibly, the university could issue a 1098-T for the full tuition, and a 1099-MISC for the discount, and that might result in an ok tax position, but it seems wrong to me.

The rules for adjunct unpaid faculty might be different than regular students, but it seems strange to me that they would issue a 1099-MISC for a tuition discount.   This might be a case where you do not report or pay tax on the 1099-MISC at all, and you reduce the amount of tuition that you claim toward any tax credits.