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Level 1

1099-MISC for a stipend payment - where do I put it?

In the acceptance contract, it states:
"A stipend is generally an amount paid for the benefit of a student or an attendee of a class, workshop, or
training project for their attendance or participation ONLY, not for services rendered. Stipends are payments
that can be used by the recipient to defray expenses such as tuition, fees, books, supplies, and living expenses.
Stipend recipients cannot be USRA employees. An amount paid for “services rendered” is a “wage” under the
IRS regulations and must be paid as salaries and wages. Stipend payments cannot be tied to any obligation for
past, present or future services. There can be no employer/employee relationship associated with stipend
payments and there are no fringe benefits associated with stipend payments."
This is for a USRA NASA internship, and the stipend was $9600. I believe this would fall under a taxable fellowship/scholarship but I am not sure where to put it. The internship was related to my coursework and I received school credit for it.
1 Best answer

Accepted Solutions
Level 3

1099-MISC for a stipend payment - where do I put it?

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:

  • Open (continue) your return if it's not already open.
  • In the Search box (top right-hand corner), type “1099-misc
  • Click on the Magnifying Glass icon.
  • Click on “Jump to 1099-misc” link highlighted in Blue.
  • Answer the Step-by-step instructions.

and make an adjustment using the steps below:

  1. Federal taxes
  2. Wages and Income
  3. Scroll down to Less Common Income
  4. Select Miscellaneous Income.
  5. Select “Other reportable income”, click ‘Yes’ and you will be prompted to enter Description and amount. Please be sure to write a short explanation and enter the amount as a negative number.   At this point, the form 1040 will show full amount as taxable AND as a negative adjustment on line 21. The end result: form is reported but not taxable.

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.

  1. Federal Taxes
  2. Deduction & Credits  
  3. Scroll down to Education
  4. Select Expenses and Scholarships
  5. Follow the prompts… It will be somewhat confusing as you are answering the questions as if you claim an education credit… answer the initial questions and select that you did not receive form 1098-T. You will be asked for school’s name and address, just fill out the program information you are in... You will eventually see a screen "Did (your name) receive a scholarship or grant in 2016? Please enter your stipend in other Scholarships/Grants/Fellowships; this will ensure that the stipend is taxable on line 7 form 1040 as wages.

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:

  1. From My Account drop down, select Tools (you must be logged into your tax return)
  2. Select View Tax Summary
  3. Select Preview my 1040 


[Edited 3/08/17]

6 Replies
Level 1

1099-MISC for a stipend payment - where do I put it?

I'm in the same boat and collected all the receipts for my visit including rent/food/gas.  Can I still take the amount spent as a business deduction still using the technique for box 3?  It's a sizable amount, approximately 4/5 of the stipend.
Level 3

1099-MISC for a stipend payment - where do I put it?

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:

  • Open (continue) your return if it's not already open.
  • In the Search box (top right-hand corner), type “1099-misc
  • Click on the Magnifying Glass icon.
  • Click on “Jump to 1099-misc” link highlighted in Blue.
  • Answer the Step-by-step instructions.

and make an adjustment using the steps below:

  1. Federal taxes
  2. Wages and Income
  3. Scroll down to Less Common Income
  4. Select Miscellaneous Income.
  5. Select “Other reportable income”, click ‘Yes’ and you will be prompted to enter Description and amount. Please be sure to write a short explanation and enter the amount as a negative number.   At this point, the form 1040 will show full amount as taxable AND as a negative adjustment on line 21. The end result: form is reported but not taxable.

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.

  1. Federal Taxes
  2. Deduction & Credits  
  3. Scroll down to Education
  4. Select Expenses and Scholarships
  5. Follow the prompts… It will be somewhat confusing as you are answering the questions as if you claim an education credit… answer the initial questions and select that you did not receive form 1098-T. You will be asked for school’s name and address, just fill out the program information you are in... You will eventually see a screen "Did (your name) receive a scholarship or grant in 2016? Please enter your stipend in other Scholarships/Grants/Fellowships; this will ensure that the stipend is taxable on line 7 form 1040 as wages.

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:

  1. From My Account drop down, select Tools (you must be logged into your tax return)
  2. Select View Tax Summary
  3. Select Preview my 1040 


[Edited 3/08/17]

Level 3

1099-MISC for a stipend payment - where do I put it?

I have updated my answer.  Hope this helps now.
Level 1

1099-MISC for a stipend payment - where do I put it?

Hello, I am trying to follow these directions for my husband’s doctoral stipends. He received two 1099-MISCs with the amounts reported in box 7. You say, “you would enter the stipend as an expense (you can create your own description).” But when I get to the “tell us about your expenses” page, I don’t know which category to choose (i.e., legal & professional fees, office expenses, etc.) I don’t see a place to create your own category. Can you please help to guide me on what category to choose on this page, or how I need to proceed differently to enter the expense amount? Also, since he received two 1099s, I assume I total the two amounts and enter them as one expense? Thank you!!
Level 1

1099-MISC for a stipend payment - where do I put it?

The directions above are great but my question is do I put the stipend (1099-Misc) on my dependent student's taxes or do I put it on mine.  It  came in the student's name and SSN.  The 1098-T is on my taxes.
Level 1

1099-MISC for a stipend payment - where do I put it?

Same question as above but my dependent received a 1099 Misc Line 7 for fellowship money - how do I file on my income tax - he had no other income?