1099 Misc for Stipend

[RJ_10]

My son received a 1099-MISC form for a stipend he received for participating in a summer fellows program through his university, which he has done the past two years and will do it one last time this summer. The intent of the stipend is to cover his living expenses while volunteering his time with an organization. When I answer the questions of whether or not he did this last year and will this next year, his tax amount owing increases and TT adds forms as if he is self-employed.  I am a little confused because I wouldn't consider this as being self-employment and taxable, but I don't know how else to report the money. Is this taxable income?  If not, how do I eliminate all the forms that are being loaded?

[GiseleD]

Please see Tax Expert TomK's advice here, or read on:

There will be a few steps to follow to report your stipend correctly because of the form 1099-MISC. First, you would have to report 1099-MISC and make adjustments for the IRS matching purposes. Then, you would report the stipend correctly using steps below.   

REPORT 1099-MISC

IF box 3 reports your stipend, report the form:

To enter/edit a 1099-MISC form:

• Open (continue) your return if it's not already open.
• In the Search box (top right-hand corner), type “1099-misc’
• Click on the Magnifying Glass icon.
• Click on “Jump to 1099-misc” link highlighted in Blue.
• Answer the Step-by-step instructions.

And then make an adjustment using the steps below:

1. Federal taxes
2. Wages and Income
3. Scroll down to Less Common Income
4. Select Miscellaneous Income.
5. Select “Other reportable income”, click ‘Yes’ and you will be prompted to enter Description and amount. Please be sure to write a short explanation and enter the amount as a negative number.   At this point, the form 1040 will show full amount as taxable AND as a negative adjustment on line 21. The end result: form is reported but not taxable.

If box 7 reports the stipend, you would have to report it as self-employed income, then enter the same amount as your "business" expense.  This will ensure that form 1099-MISC is reported for matching purposes, but the amount is not taxable as self-employment income. 

Go to:

1.   Federal Taxes

2.   Wages and Income

3. Self-Employment, Select Income and Expenses - follow the interview questions; you would report the stipend as if you own a business; once general questions are answered, you would enter the stipend as an expense (you can create your own description). The end result: form 1099-MISC is reported, but the income is not self-employment income--because it shouldn’t be.

[RJ_10]

Thank you!

[RJ_10]

Apologies, I am just now getting back to completing taxes for this year. Are there forms associated with the 1099-MISC that Turbo Tax automatically loaded that I should delete like Schedule C, Qualified Business Income, or should I just let them be? There are many forms listed but I don't know which ones would be specific to the 1099.

Thanks again ~

[ColeenD3]

I'm playing catch-up, so I need to ask a question. Which box was the income reported, Box 3 or Box 7?

[KrisD15]

@RJ_10

Please sign into your account and return, 

Click Federal then Wages and Income

Scroll down and find the 1099-MISC that is being reported incorrectly and delete that. 

Sign out of your account to refresh. 

View your 1040 to see if Schedule C is listed, and if it is, delete that form. 

Sign into your account and go into the return

Open the “Tax Tools” drop-down on the left side bar

Click on “Tools” on that drop-down

Click Delete a form (the third one down) on the “Tools Center” screen

Scroll down and click “Delete” next to Schedule C

[RJ_10]

The income is reported in Box 3.

[DaveF1006]

This must be done in a precise way in order not for it to be declared as Self-employment

1. Go to federal>wages and income>other common income>1099 Misc income
2. Go through the preliminary questions until you get to the question that asks "Did the involve work that's like XXX main job?"
3. Make sure you say no to this.
4. Then it will ask, how often he gets the money. Answer that.
5. then it will ask Did XXX involve an intent to earn money? Here you will say no.
6. I would suggest deleting the 1099 MISC that is entered or edit to see if you receive these questions in your return because this is important in determining if this taxable income or not.