Most agencies do issue 1099's for stipends paid to host families for exchange students, if it's a flat monthly amount as opposed to reimbursement for specific expenses. 1099's are required to be filed no later than January 31st.
Flat monthly amounts with no accountability to the agency are not specifically excluded from tax, and they would normally be reported as Non Employee Compensation. You can, however, deduct your actual expenses from the stipend, and if your expenses are equal to your stipend, you would not owe any tax.
To report this in Turbo Tax:
If you're being reimbursed for specific expenses that you incurred because of your guest, and you had to account to the agency involved in order to be paid, then there is no income to report.
If your expenses were greater than the stipend, you may be able to claim a charitable deduction for your extra hosting expenses.
Should you have any questions in regards to this question, please respond to this link.
Hello-
My question is related to this topic- right now, TurboTax is entering my 1099-MISC data and porting it to a schedule C (business income) instead of the 1099-MISC category. Is this correct, or a bug in the program? Last year, we entered it as 1099-MISC and that's where it stayed.
To enter your stipend follow these steps.
With TurboTax open select Wages & Income click on I'll choose what I work on
Scroll down to Less Common Income and select Miscellaneous Income, 1099-A, 1099-C
On the next page, select Other reportable income
On the page, Other Taxable Income enter Fellowship in the description.
This will put the income on Schedule 1 Line 8 of your Form1040, as required by the IRS. You will pay state and federal income tax on the amount, but it will not be subject to self-employment tax.
So- why is my 1099-MISC form not reporting any value for this year, even though I entered a value for the amount I received from the International Student organization?
EDIT: I discovered that because I marked as receiving some of this money in 2018 as well as in 2019, it was triggering a migration to schedule C. When I broke it down into a simple payment for hosting per semester, it correctly recognized it as 1099-MISC.
Hi, We received a 1099-MISC from the agency for $3200. When I enter it into the "self-employment income and expenses" do I have to put the gross amount of $3200 or the net income? I added all of the possible deductions, but with the calculations made by the website, it's still a huge amount of taxes for how little money we actually make after expenses. How should I enter that on Turbo Tax and not pay taxes on the money we spent on the student?
You will need to enter the income the income as self-employment income as it is non employee compensation.
The IRS receives a copy of your 1099-MISC and if it is not reported on your return, you will probably receive a notice when they match what is on a return with what they have for their record.
Please see the response from IsabellaG:
Most agencies do issue 1099s for stipends paid to host families for exchange students, if it's a flat monthly amount as opposed to reimbursement for specific expenses. You should verify with the agency that they will not be sending a 1099.
If you're being reimbursed for specific expenses that you incurred because of your guest, and you had to account to the agency involved in order to be paid, then there is no income to report.
Flat monthly amounts with no accountability to the agency are not specifically excluded from tax, and they would normally be reported as Non Employee Compensation. You can, however, deduct your actual expenses from the stipend, and if your expenses are equal to your stipend, you would not owe any tax.
If your expenses were greater than the stipend, you may be able to claim a charitable deduction for your extra hosting expenses. See page 4 of the following link:
https://www.irs.gov/pub/irs-pdf/p526.pdf
Please see the attached link for possible deductible expenses to claim:
Exchange Student - New this year on our 1099-MISC the income is reported in Box 3 other income. Can I still do a schedule C, etc? I'm very confused...
To enter your stipend follow these steps.
With TurboTax open select Wages & Income click on I'll choose what I work on
Scroll down to Less Common Income and select Miscellaneous Income, 1099-A, 1099-C
On the next page, select Other reportable income
On the page, Other Taxable Income enter Stipend in the description.
This will put the income on Schedule 1 Line 8 of your Form 1040, as required by the IRS. You will pay state and federal income tax on the amount, but it will not be subject to self-employment tax.
Hello
I didn't receive 1099-A, 1099-C - the form I rec'd was a 1099-MISC, amount in Box 3
Will this be on a schedule C? Will we be liable for self employment taxes?
But will this allow us to deduct our expenses for hosting?
I am confused as another response above said it should not be self-employment income.
No, it is not subject to self employment tax and is not considered self employment income. Follow the steps as provided by @LeonardSmith and placed here for your convivence.
To enter your stipend follow these steps.
This will put the income on Schedule 1 Line 8 of your Form 1040, as required by the IRS. You will pay state and federal income tax on the amount, but it will not be subject to self-employment tax.
If you have expenses in excess of the income you received you can deduct as much as $50 per month per student as a charitable donation if you itemize deductions. IRS Publication 526 (See expenses paid for students living with you.)
Is specifically says "Do Not enter income reported on Form 1099-misc. Is there another way to report this?
In this instance, it is acceptable to the IRS to enter income reported on a 1099-Misc that is not Business Income.
Or, in the 1099-Misc section, select 'None' from the 'Uncommon Situations' screen.
Indicate that it 'did not involve work like my main job', that you received it 'only in 2022' and 'didn't involve an intent to earn money' on the following screens.
I understand that receiving a stipend wouldn't require self-employment tax. Does that also mean that this type of income does not qualify for the qualified income deduction? Thanks!
That's correct, it won't make you eligible for the qualified business income deduction.
Please see the TurboTax Help article Do I qualify for the qualified business income deduction? for more information.