Educational stipend disbursements from Year Up as a scholarship

[brianyearup23]

Hi, I am having an issue trying to enter my stipend into turbo tax and i am not sure where to enter it into. I received a letter from Year Up, which is a non-profit organization workforce development program that provides skill development to help young adults gain careers. In the letter, I received an educational stipend from Year Up Inc. during the full calendar year of 2023 and the amount is considered taxable. It also states that I am required to report this scholarship income on my federal and state tax returns and refer to IRS Publication 970 to report this income. Unfortunately, they are not my employer, so they do not have an EIN. The program is for educational purposes and their EIN is not required when reporting the stipend I received as scholarship income, according to the letter. As for reporting it, it said that if I need to file form 1040, I will include the taxable amount on line 7 and enter SCH since this program was not report on a w-2. So, how should I enter this amount into turbo tax? I am using Turbo Tax Premium online

[Vanessa A]

Education stipend and scholarship income get entered on line 8, not line 7.  Line 7 is for capital gains and a stipend does not fall into this category. 

You can enter it by selecting the following

• Income
• Show More next to Less Common Income
• Start next to Misc Income
• Start next to Other Reportable Income
• Enter the income as Other Taxable Income with a description of Taxable Stipend from XXX college and the Amount

This will enter the income on line z of her Schedule 1 with a description which will then flow to line 8 of the 1040.  It will be taxed as ordinary income instead of self-employed income. 

If this were scholarship income, it would be entered in the education section of TurboTax instead of Miscellaneous income.

To enter scholarship income select the following:

• Federal 
• Deductions and Credits
• Under Education select Expenses and Scholarships
• Enter your information for your scholarships and expenses

Scholarship and Stipend Taxation

[brianyearup23]

What about reporting it on my state tax? Will this carry it over?

[Vanessa A]

Yes.  It will carry it should carry it over.  While you are walking through the state return, you should be able to see it there.  Different states have different rules on how to tax different income.  So, you may be asked what this income is for on your state return or it may just be carried over without any adjustments or questions.  In the state summary screen on your your state form, you should look to be sure it is included in your income, prior to filing your return. 

On the menu bar on the left that shows. 

1. Select Tax Tools 
2. On the drop-down select Tools 
3. On the pop-up menu 
4. Select View Tax Summary 
5. On the left sidebar, select Preview my 1040 

[brianyearup23]

Just to clarify, this will be the area I would use to apply the amount I received from Year Up stipend income as a scholarship income? This is what the letter had said also, that the stipend is treated as a scholarship income.

[Vanessa A]

Yes, that is correct. 

[Hal_Al]

The reference to line 7 of form 1040, for scholarship income,  is from 2017 and earlier.

Today, it goes on line 8r of Schedule 1. 

Enter at Educational Expenses and Scholarships, under Deductions and credits (not in the income section). After answering no to having a 1098-T, answer yes to qualifying for an exception (that gets you to the entry screens). You may have to go thru the whole education interview to get to the scholarship screen.

If you have a 1098-T, enter it.  You will eventually be asked if you had scholarship not shown on the 1098-T.  Then you will be asked if any of it was used for room and board (R&B).  Enter the amount of the stipend.  R&B are not "qualified expenses".  So, this is how you tell TT that it's taxable. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B.  This will put it on line 8r of Schedule 1.