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You are correct that the stipend is reported as taxable scholarship. 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 an 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 1099-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 TurboTax, 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:
[Edited 3/08/17]
You are correct that the stipend is reported as taxable scholarship. 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 an 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 1099-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 TurboTax, 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:
[Edited 3/08/17]
For a taxable stipend--subject to FIT but not Soc Sec/Med, simply reporting the income on Schedule C with a corresponding equal amount reported on the Schedule C as an expense does NOT work, because for FIT purposes that reduces the income to zero.
So, in my son's case, he just graduated from college as undergrad (and thus would get a 1098-T), but this Fall, he is a graduate PhD student with a stipend. Thus, in the responses above, particularly the one that said to select "no" if he got a 1098-T, well, he did get a 1098-T as an undergrad for the tuition he paid undergrad. He is now a PhD student at a different school with a stipend. So, three questions:
1. How will he declare his income on turbotax as a stipend?
2. Does anyone have a ballpark about how much, percentage-wise, he should pay in quarterly tax payments? The reason is that part of his stipend may be offset by educational expenses, depending on which form the university uses at the end of the year (1099-misc or 1098-T). So the percentage might be lower than it would be for ordinary income. He's single with no dependents.
3. Does anyone know if PhD stipends are taxable in the state of Pennsylvania for state or local taxes?
Thanks in advance.
I am having the same problem and I am also a student. I got a stipend amount for my internship but it came in a 1099-NEC form, how do I go about entering this in?
If you are performing any duties in conjunction with the stipend (e.g. teaching assistant, research assistant, student teacher, clerical work, etc.), then the payment is considered "self-employment income". This income is subject to both income tax and self-employment taxes
To enter your 1099-NEC, you may use this shortcut in TurboTax to get to the right page:
To confirm your 1099-NEC was linked to your Schedule C, please follow the instructions below:
I got a 1099-NEC for a stipend that was NOT wages or in exchange for any services. I understand that it is subject to income tax, but if reported as a 1099 NEC, then it will treat it as subject to social security and medicare tax as well. The provider will not correct it. How do I report this properly?
You can enter the stipend as Miscellaneous Income using these steps:
@dblasband
What do I do about the improperly issued 1099 NEC, then? Just ignore it? Won't this be a red flag?
You can enter the income as ordinary income. This could be a red flag to the IRS and you may hear from them in the next year. You should be prepared to defend your position that this income was not wages.
Here is an article that discusses stipend income in detail.
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