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.

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]

I have updated my answer.  Hope this helps now.

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!!

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.

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?

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: 

1. Open your return.
2. Search for 1099-NEC with the magnifying glass tool at the top of the page.
3. Click on the Jump to 1099-NEC link at the top of the search results. 
4. Click Add a 1099-NEC.
5. Enter the information as shown on your form. 
6. Follow the on-screen instructions. 
7. On the page titled Guess what? You can deduct expenses for the example work choose Yes, I have expenses to deduct.
8. On the page titled Self-employed 1099-NEC Income select the Schedule C you are inputting this income for. If this is a new Schedule C for this year, you can add a new business on this screen.

To confirm your 1099-NEC was linked to your Schedule C, please follow the instructions below:

1. Open your return.
2. Search for Sch C with the magnifying glass tool at the top of the page.
3. Click on the Jump to Sch C link at the top of the search results. 
4. On the page titled Your 2020 self-employed work summary, you should see your 1099-NEC listed with the corresponding amount. 
5. Click review next to the income from your 1099-NEC. 
6. Follow the on-screen instructions on the following pages. 

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:

1. Click on Federal > Wages & Income   
2. In the Less Common Income section , click on the Start/Update box next to Miscellaneous Income, 1099-A, 1099-COn the Miscellaneous Income screen, click on the Start/Revisit box next to Other reportable income. 
3. On the Any Other Taxable Income? screen, click the Yes box.
4. Add the income and description on the next screen, Other Taxable Income.
5. This amount will appear on line 8 of the 1040 (Other Income from Schedule 1).

@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.

What TurboTax software do I need to do this?

If you are reporting stipend income, in the Education section of Deductions & Credits, you can use any version of TurboTax (even the Free edition).

[Edited | 3/25/2021 1:23 pm PDT]

So If you are performing any duties in conjunction with the stipend, can you deduct housing, food, etc as business expenses on a Schedule since the fellowship was out of town? 

No, you can not deduct housing, food, etc. as a business expense on a schedule.  A stipend is a fixed amount of money provided to people pursuing unpaid work to help offset expenses such as housing and food.

@Marka81

Then how do you record it? It was issued on 1099NEC with box 1 which is "non employee compensation.' which should be followed by a Schedule C.  It was not issued as 1099 MISC other income or a W-2. And I know stipend payments are at least taxable in terms of PIT. 

@LeonardS 

It depends. 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, which is reported on a Schedule C and subject to both income tax and self-employment taxes. If you are not performing any duties in conjunction with the stipend, it can be classified as Other Income. 

If you want to enter your 1099-NEC and have it flow to a Schedule C, please follow the instructions below:

1. Open your return.
2. Search for 1099-NEC with the magnifying glass tool at the top of the page.
3. Click on the Jump to 1099-NEC link at the top of the search results. 
4. Enter your 1099-NEC. 
5. Describe the reason for your 1099-NEC. 
6. Choose the option None of these apply to me on the page Does one of these uncommon situations apply?
7. The amount from your 1099-NEC will flow to Schedule C. 

If you want to enter your 1099-NEC and have it flow to Other Income (and not be classified as self-employed), please follow the instructions below:  

1. Open your return.
2. Search for 1099-NEC with the magnifying glass tool at the top of the page.
3. Click on the Jump to 1099-NEC link at the top of the search results. 
4. Enter your 1099-NEC. 
5. Describe the reason for your 1099-NEC. 
6. Choose the option This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common) on the page Does one of these uncommon situations apply?
7. The amount from your 1099-NEC will flow to Other Income. 

@Marka81

The negative number is coming up as line 8 on our 1040, not line 21. Is that correct?

Yes, prior to TCJA, other income was entered on Line 21. It is now Line 8, 1040.

The original post in this thread provides instructions for reporting a 1099-MISC for a stipend.

My son has received a stipend for summer internship/research at a university which is different from the one which he attends during the school year, reported on form 1099-MISC box 3.
I am filing a separate tax return for him and using the instructions provided in this thread to enter the amount such that it will be listed as "Other income" (and not self-employment).

At this point, TurboTax calculates a hefty amount of Federal & State taxes.  The instructions proceed to explain that I should make the entire amount non-taxable by entering it as a negative number in a separate box.

"

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"

Tax amount is reduced to zero, but I can't find any websites that could confirm the legality of this strategy.Can you please confirm that a stipend for an undergraduate summer internship/research at a university which is different from the one that the student attends during the school year, reported on form 1099-MISC box 3 for tax year 2022, is non-taxable?

Can you please confirm that a stipend for an undergraduate summer internship/research at a university which is different from the one that the student attends during the school year, reported on form 1099-MISC box 3 for tax year 2022, is non-taxable?  A stipend received from an institution where he is not a student is taxable income. 

Taxable

"You must include in gross income:

• Amounts used for incidental expenses, such as room and board, travel, and optional equipment.
• Amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant. "

Tax-Free

If you receive a scholarship, a fellowship grant, or other grant, all or part of the amounts you receive may be tax-free. Scholarships, fellowship grants, and other grants are tax-free if you meet the following conditions:

• You're a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities; and
• The amounts you receive are used to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses at the educational institution.

So you are correct in entering the stipend as "Other income" , however, do not follow the rest of the instructions to remove it from taxable income.  This income is subject to federal taxes and potentially state and local taxes depending on the state you live in. 

To enter this income, you will take the following steps only:

• Federal
• Income and Expenses
• Scroll down to Less Common Income and click Show More
• Start next to Miscellaneous Income
• Start next to Other Reportable Income

This will put it on line 8z of your schedule 1 as other income.