How to report a 1099-MISC received for a summer research stipend?

[Tyler2]

My wife is a graduate student and normal receives income that is reported on a W-2. During the year she also performed research that was set up in the form of her own business. She received a separate 1099-MISC for this business with income reported in box 7, paid gross receipts tax, and this was declared on a schedule C. Additionally she performed a separate summer research project where she was paid a stipend of $4000 that was reported in box 3 of a 1099-MISC. Does this also need to be reported as business income on a schedule C and be taxed accordingly, or can it be reported as other non-work related income without intent to earn money? Thanks!

[DanielV01 · Accepted solution]

It depends.  The word "stipend" generally is associated with non-work income, as it is not considered "pay" as such.  If this is the true definition of that income received, it may be treated as such.  If, however, it is compensation for her business, then it would be included in Schedule C (and she can deduct expenses against it, but will have to pay self-employment tax as well).  

Here is an FAQ that discusses the difference between self-employment and other income:  https://ttlc.intuit.com/replies/3300312

Here's an FAQ that will assist you to enter the form in TurboTax so it is correctly applied:  https://ttlc.intuit.com/replies/4770594