I was sent a 1099-MISC for an Educational Stipend that I received, but my state tax return is saying that because of that, I'm self employed and need to enter the Business Tax ID Code (which I don't have). What do I do?
The fact that you have 1099-Misc slightly complicates the matters. 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:
and make adjustment using the steps below:
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.
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 199-MISC is reported, but the income is not self-employment income, because it shouldn’t be.
REPORT STIPEND INCOME CORRECTLY
To report stipend income in Turbo Tax, you must visit Deductions and Credits, Education Expenses section. You must answer all the questions, the taxable amount will be computed as the excess of your scholarship over the qualified education expenses.
Once done, you may review your form 1040 and to verify that line 7 of the form looks correct. You may do so prior to paying for the program:
The fact that you have 1099-Misc slightly complicates the matters. 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:
and make adjustment using the steps below:
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.
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 199-MISC is reported, but the income is not self-employment income, because it shouldn’t be.
REPORT STIPEND INCOME CORRECTLY
To report stipend income in Turbo Tax, you must visit Deductions and Credits, Education Expenses section. You must answer all the questions, the taxable amount will be computed as the excess of your scholarship over the qualified education expenses.
Once done, you may review your form 1040 and to verify that line 7 of the form looks correct. You may do so prior to paying for the program:
I have stipend on Box 7 in 1099-MISC. So I try to follow the steps outlined above. But I can not get to "Self-Employment , Select Income and Expenses " under "Wages and Income". Why?
The instructions make sense, but I have one follow-up question. In the section "Report Stipend Income Correctly" it's noted that in the "Select Expenses and Scholarships" section to answer the initial questions and "select that you did not receive form 1098-T". But in my case, I did receive a form 1098-T, which reported a Scholarship received for Tuition. So where you note to "enter your stipend in other Scholarships/Grants/Fellowships, to ensure that the stipend is taxable on line 7 form 1040", do I instead say that I did receive form 1098-T, and then enter both the Scholarship AND the stipend in that section? Would that mean that both the scholarship and the stipend would then end up on line 7 of form 1040?