Is a stipend for expenses incurred in other states for an internship considered to be income earned in another state?

[dan0460]

Trying to help my son, a grad student in Texas.  He worked for several weeks over the summer at an unpaid internship in Virginia and Maryland. There is no W2 income.  He was given a stipend to help with living expenses during the internship, but was not issued a 1099 of any kind (so no withholding).  The check was from the University of Virginia and addressed to his home address in Texas.

I assume this is taxable income, but I'm struggling to answer the TurboTax question "Did you make money in any other states?"  Any ideas on how to deal with this?  Will we need to do state returns for Virginia or Maryland or both?

Any guidance will be greatly appreciated!

[Coleen3 · Accepted solution]

Taxable Fellowship – A payment, typically known as a "stipend", used for living and incidental expenses such as room and board, travel, equipment, i.e. computer or other expenses that are not required of all students enrolled in courses. These payments are taxable income to the student.

However, states have a filing requirment. He would be considered a nonresident of VA.

https://tax.virginia.gov/who-must-file

[dan0460]

Hello Collen, thanks for the quick response.  I followed the link you provided and I'm not clear on what is meant by "Virginia adjusted gross income".  If this is the amount of the stipend from UVA only, he falls below the $11,950 threshold and isn't required to file or pay Virginia tax.  If this is his federal adjusted gross income (including his income earned in Texas), then he is over that threshold and it appears that I will have to do a Virginia return.  Do you know what they mean by Virginia adjusted gross income?
Thanks again!
Dan

[Coleen3]

He's not a dependent?

[Coleen3]

If your income is only from wages, salaries and interest from a
savings or checking account, your VAGI is usually the same as the
federal adjusted gross income shown on your federal return. Once
you have computed your VAGI, check the chart below to see if you
need to file a Virginia income tax return.
YOU DO NOT HAVE TO FILE IF YOU ARE:
Single and your VAGI is less than ..................$11,950
Married filing a joint return (both must
have Virginia Source Income) and your
combined VAGI is less than............................$23,900
Married, spouse has no income from
any source and your VAGI is less than ..........$11,950
Married filing separately (on separate
forms) and your VAGI is less than..................$11,950
If you are not required to file, but you had Virginia income tax
withheld or you made estimated payments, you are entitled to a
refund of the amount withheld or paid. You must file a return
to get a refund.
<a rel="nofollow" target="_blank" href="https://tax.virginia.gov/sites/default/files/vatax-pdf/2018-form-763-instructions.pdf">https://tax.v...>

[dan0460]

Hi Colleen, he is not a dependent.  He works as a research assistant at his school in Texas, and his tuition is covered by scholarships.  He normally does his own taxes, but this is weird income.  It seems it is handled in TurboTax as a grant under education expense (in addition to the amount on his 1098-T) and since the amount of the stipend is taxable it goes to 1040 line 1 income.  TurboTax makes a note on line 1, "SCH 6600".  This is consistent with the IRS document on how to file.  So I'll buy a Virginia state TurboTax and see what it comes up with.

[Coleen3]

I hope this was helpful.