How to show stipend in tax

[IsabellaG]

To report your stipend income:

• Go to Federal Taxes>   Wages and Income
• Scroll to the Less Common Income section and choose Miscellaneous Income (the last choice) 
• Choose Other income not already reported on a Form W-2 or Form 1099
•  Answer Yes on the Other Wages Received screen
• Continue past Wages Earned as a Household Employee and Sick or Disability Pay
•  Answer Yes on the Any Other Earned Income screen
•  Choose Other on the Enter Source of Other Earned Income screen
•   Enter your stipend information on the Any Other Earned Income screen.

This will report your stipend on line 7 of your Form 1040, and you will not be subject to Self-Employment Tax.

[VWCAMINO]

Hello,

My resident in CA and had summer internship in CA for 2022.

From September to December 2022, I got stipend from Illinois University.  I had already paid estimated tax to Illinois Department of Revenue.

How do I report Stipend on Federal 1040?

How do I report Stipend on CA 540?

Do I have to file a separate Illinois State Return?

Thanks.

-VW

[Anonymous]

I thought stipends were considered unearned income?

[HopeS]

Stipends may be offered in lieu of or in addition to a salary. Interns, apprentices, fellows, and clergy are common recipients of stipends. Most stipends are considered taxable income, which means that recipients may be responsible for their own withholding taxes if they aren't deducted by the issuer. The amount put towards qualifying educational expenses isn't taxable and doesn’t need to be reported to the IRS, but the remaining amount does. For example, if $1,000 of a stipend goes toward tuition and books, and $2,000 goes toward room and board, only $2,000 is taxable. Stipends are awards and not wages for services, therefore, you don't have to pay self-employment taxes.

How to enter Stipends in TurboTax:

• Go to Federal Taxes>   Wages and Income
• Scroll to the Less Common Income section and choose Miscellaneous Income (the last choice)
• Choose Other income not already reported on a Form W-2 or Form 1099
• Answer Yes on the Other Wages Received screen
• Continue past Wages Earned as a Household Employee and Sick or Disability Pay
• Answer Yes on the Any Other Earned Income screen
• Choose Other on the Enter Source of Other Earned Income screen
• Enter your stipend information on the Any Other Earned Income screen.

See additional information in the links below:

What is Stipend

@Anonymous 

[Anonymous]

This doesn’t answer my question. Some resources online claim that a stipend counts as unearned income, so your instructions wouldn’t apply. How do I know if mine is earned or unearned income 

[BrittanyS]

Stipends would be considered taxable income.  Although, they are not treated the same as wages earned and are not subject to Social Security and Medicare taxes.  In most cases, they are considered a form of compensation paid and considered earned income.  Unearned income includes investment-type income such as taxable interest, ordinary dividends, capital gain distributions, unemployment compensation, taxable social security benefits, pensions, annuities, cancellation of debt, and distributions of unearned income from a trust.  

For more information on stipends, see the link below:

Stipends

@Anonymous 

[Kevin C1]

I receive a 1099-NEC form now instead of a 1099-Misc form for a stipend I receive for being a corp. board member of a ESOP company. Does that change how I should record it on my Federal Return in Turbo Tax?

[AbrahamT]

Now that your stipend is showing up on a 1099NEC that makes it self employmentment income and you would be subject to self employment tax whereas when it was formerly reported on a 1099MISC, you were not subject to it. See HERE  for a detailed description of what typically gets reported on a 109MISC vs. a 1099NEC. In Turbotax you would record 1099NEC as follows. Simp;ly type in 1099NEC in the magnifying glass in the upper right hand side and then hit "Jump to 1099NEC." 

and follow the prompts. This figure will now show up on Line 3, Sch 1 which will flow through to Line 8 on Pg. 1 of the 1040 and which you'll pay self employment taxes which will consequently show up on Sch 2, Line 4. Being that it is self employment income which will appear on Sch C, you may take expenses agaoinst it to offset the income. When your income was initially reported on a 1099MISC , the figure showed up on Line 8Z instead of Line 3, Sch 1 and will also flow through to Line 8 of that Pg 1 of that 1040  with the only difference being that you "DO NOT" pay any self employment tax. You may take expenses against this 1099MISC income as well. But guess what what, if this stipend was with the intent to earn money, than you would pay self employment taxes on this as well.

[Kevin C1]

So in the end do I pay more tax if the stipend shows up on 1040 line 1h (that's where I have put it in prior years)  vs. line 8 as business income assuming I have no expenses to offset income? 

[TomK2023]

Yes, if the stipend is entered as business income, it will be subject to self-employment tax.