How should I report graduate fellowship income such that it counts as earned income for the purpose of Roth IRA contributions?

[zml941116]

Hi, I am having the same issue this year. Could anyone offer a solution? I reported my fellowship with Miscellaneous Income, 1099-A, 1099-C under Less Common Income. However, proceeding to IRA contribution, TurboTax still thinks I shouldn't contribute any amount last year.

[Hal_Al]

@zml941116  You can't enter it there. It gets treated as Other (unearned) income and doesn't qualify as "compensation" for IRA purposes.  Scholarships, for grad students, is treated as compensation for IRA contributions.  You have to get it on line 8r of Schedule 1.

To do that you enter it in the Education Expenses and Scholarships in the Deductions and Credits section (not in the income section).  

[rcourt3630]

This was the case in TY 2021, However the problem is the Fed. 1040 changed the lines again for TY 2022.  Now you report it on line 8r on Schedule 1.  TT tax is not allowing it to go on line 1 of 1040 which is now for wages ONLY.  TT needs to allow line 8r (taxable fellowship income) to count as earned income for the purpose of Ira contribution per the Secure ACT of 2019.  It worked perfectly in TT 2021 NOT in TT 2022!! please fix ASAP

[MichelleLO]

Please reach out to TurboTax Customer Support as your issue would be best resolved with one-on-one support.

What is the TurboTax phone number?

@zml941116 

@rcourt3630

[rcourt3630]

I already did. They just want to up sale you. 

thanks anyway.....hoping we get update

[tawilliams09]

same problem i am having...how did you resolve it?

[tawilliams09]

I clicked the link for updates but there is no info...what is the resolution?

[tawilliams09]

so what is the fix?

[AbrahamT]

Enter it through here

Deductions and Credits

Education/ Scholarships

Enter the school information and check off Graduate student

Enrollment status at least part time, answer Yes

Hit enter, enter etc till you get to this screen

The amount will seamlessly flow through to Sch 1, Line 8R as shown here

and then seamlessly to Form 1040, Page 1 line 8.

I hope this works well for you. Enjoy!

[sjletai]

My son is having the same issue for his graduate school taxable stipend, erroneously charging him $360 penalty for excess Roth IRA contribution.   The link is not working, which you attached in order to sign up for notice of a TurboTax fix.  Please let me know urgently when this fix is ready.

[AbrahamT]

Simply follow these instructions

Deductions and Credits

Education/ Scholarships

Enter the school information and check off Graduate Student

Enrollment status at least part time, anser Yes

Hit enter, enter until you get to this screen

Did You Receive a Scholarship or Grant, answer Yes

then, enter the amount you received.

This should flow seamlessly to Sch 1 Line 8r  Scholarships and fellowship grants not reported on a W2

which consequently will appear on 1040 Line 8 Other income from Sch 1, line 8

I hope this solves your question.

[zml941116]

Hi Abraham, thanks for your reply. But I can't find the options you presented. The only options I saw under deductions -> eductions are shown as attached. Would you mind telling me what I should do from here? Thanks.

[Hal_Al]

Click REVISIT at Expenses and Scholarships (1098-T)

[zml941116]

Thanks a lot. I have entered the scholarship. However, TurboTax still claims that I made an excess contribution to my Roth IRA as I proceeded. Should I just ignore the message and keep going? Please see the images attached.

[Hal_Al]

You must indicate that you are a grad student, by checking box 9 on the 1098-T.