topic 1099 misc scholarship in Education

1099 misc scholarship

Kat23jor — Sun, 02 Feb 2020 16:36:40 GMT

I received two 1099 misc for a scholarship that I received. One has an amount in box 3 and the second 1099 misc has an amount in box 7. Both of these 1099 misc exceed my 1098-t.

Do I report both 1099 misc under the 1099 section and the 1098T under the education section?

Do I enter anything under scholarships?

Re: 1099 misc scholarship

LinaJ2020 — Mon, 03 Feb 2020 00:13:50 GMT

The school should have reported the scholarship on the Form 1098-T. I don't know why they would report it on Form 1099-MISC. So, did they report any scholarship amount on the Form 1098-T? If you report the Form 1099-MISC as they are, the IRS would expect you to report the income ( scholarship in this case) as self-employed. This is not the correct reporting. I would suggest you contact your school to receive a corrected Form 1098-T.

Re: 1099 misc scholarship

NCperson — Mon, 03 Feb 2020 12:31:17 GMT

contact whomever sent you the 1099-misc as well; something doesn't seem correct

Re: 1099 misc scholarship

brommabo — Mon, 09 Mar 2020 21:58:00 GMT

Our son applied for and got a scholarship from my husband's company that was reported on a 1099-MISC Box 7 in my son's name($3000). Do we put that as a scholarship on our tax return which affects education credit negatively since he has a full tuition and fees scholarship from his college? (We have claimed him as a dependent.)Or does he report it as self employment income income and file his own tax return? He had no other income in 2019.

Re: 1099 misc scholarship

Opus 17 — Mon, 09 Mar 2020 22:07:31 GMT

@brommabo wrote:

Our son applied for and got a scholarship from my husband's company that was reported on a 1099-MISC Box 7 in my son's name($3000). Do we put that as a scholarship on our tax return which affects education credit negatively since he has a full tuition and fees scholarship from his college? (We have claimed him as a dependent.)Or does he report it as self employment income income and file his own tax return? He had no other income in 2019.

That is income in your son's name and goes on your son's return. When entering the 1099-MISC, I believe there is a box under "special circumstances" to check for scholarship. This is not self-employment and he does not have to file a schedule C. (The payer should have used box 3.)

However, if he has a full scholarship for tuition and fees, you should not be getting any tax credits. There are some tricks you can do (sometimes) in which

a: you treat part of the scholarship as if it paid for room and board instead of tuition.

b: he pays income tax on this part of the scholarship.

c: you are treated as though you paid part of the tuition with your own money, which gives you a credit bigger than his tax bill.

This is tricky and requires coordination and advanced knowledge. I'm a bit concerned that you are claiming to have a credit on a full scholarship, and yet you don't know how to report the additional taxable scholarship from the third party. You might want to write back with more info. @Hal_Al I know you know this area better than I do.

Re: 1099 misc scholarship

Hal_Al — Mon, 09 Mar 2020 23:55:07 GMT

I agree with Opus 17, the income is in your son's name and goes on your son's return. After entering the 1099-MISC, you get a screen "Does on of these Uncommon Situations apply?" Check the box "this money was from my scholarship or fellowship". Then check NO to the question "did you perform a service to earn this money". TurboTax will put the $3000 on line 8 of Schedule 1 with the notation "Scholarship or fellowship from 1099-MISC". It does not go on Schedule C, self employment. He will owe a little tax on that income, because it is not "earned income".

Because the money was reported on a 1099-Misc, you should report it as taxable income on your son's return*. This then allows you to claim the tuition on your tax return, for the tuition credit, because that $3000 worth of tuition was not paid with "tax free scholarship".

*If you would come out better by treating this as tax free scholarship, on your son' return, there is a way to do that using a work around. Bur it risks an IRS inquiry because of the 1099-Misc.