student stipend 1099 misc state tax

[sjmarts]

My son is a full-time student in Alabama, and we claim him as a dependent on our taxes. He took a course in Pennsylvania over the summer and received a $1200 meal stipend. He received a 1099 MISC for the $1200 as other income and a +$200 difference in tuition payments and scholarship/grants on 1098-T. Does he need to file taxes in PA due to the stipend? 

[Hal_Al]

No. A stipend is treated as a scholarship and not taxable in the state where the school is. 

[sjmarts]

Thank you!

[Hal_Al]

Does he have any other income? If so, how much and from what source.  1099-Misc income  is treated as unearned income.  Scholarship income is treated as earned income (up to a point).  You may want to enter the 1099-Misc income, in a different place.

Are you using online or download TurboTax?

[sjmarts]

Using the downloaded version. He has no other income since his ROTC stipend doesn't count. The course was a special course for ROTC cadets but through Un. of Pitt. He received a 1099 MISC for the $1200 which was a meal stipend they received. The 1098 T has $6819 for qualified expenses and $7089 for sch/grants. 

[Hal_Al]

$1300 is the filing requirement for dependents with unearned income.  $7089 -  $6819 f= 270.  270 + 1200 = 1470 > 1300.  He's looking $17 tax. He may be able to offset that $170 with book and maybe computer expense and not even file. 

The  Stipend should not have been reported on a 1099-Misc, so technically there is another way to enter it so it is treated as earned income*. 

In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

• “I’ll choose what I work on” Button

Scroll down to:

-Less Common Income

      -Click "Visit All".

  - On the next screen, click yes

         You'll eventually reach a screen to enter the scholarship amount. To get it on line 8r of Schedule 1, as taxable scholarship

*Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $14,600 filing requirement (2024) and the dependent standard deduction calculation (earned income + $450).  It is not earned income for the kiddie tax and other purposes (e.g. EIC).  For grad students and post grad fellows, scholarship, stipend and fellowship income is earned income ("compensation") for IRA contributions.

[sjmarts]

Thank you so much. Yes, when I entered all the info initially, it showed that he owed $16 on federal return. Then it asked about the state, and it never occurred to me whether he needed to file with Pennsylvania. If he leaves it like this and pays the $16, would he need to file a Pennsylvania return? I could only find that they require nonresidents to file if income is over $1, but I wanted to make sure since it was a stipend that was paid to him and scholarship through the program. 

[Hal_Al]

Q. If he leaves it like this and pays the $16, would he need to file a Pennsylvania return? 

A. No. The income (scholarship/stipend)  is not considered sourced in PA. 

[sjmarts]

I forgot to mention that the payer on the 1099 Misc is listed as Un. of Pittsburgh, so still OK? Thanks so much for your help. 

[Hal_Al]

Q. Payer on the 1099 Misc is listed as Un. of Pittsburgh, so still OK? 

A.  Yes. Even better; it confirms it as scholarship income. 

[sjmarts]

Thank you!!