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I am a PhD student -- my usual stipend via W-2 (low tax) was given as a 1099-MISC this year, how can I lower my tremendous tax rate?

I am a PhD student and usually get my teaching and research stipend through my university, in the form of a W-2. In 2019, I received BOTH a W-2 and a 1099-MISC. This is because my professor I work with left for another university halfway through, and so he paid me from the other university, I received a 1099-MISC for this.

 

I just inputted everything and say the high 15.3% tax rate I was given for the funds he gave me through the other university. My usual tax rate is much lower if I were to report it all on a W-2

 

At this point, because my tasks in the W-2 and 1099-MISC are essentially the same (research and teaching), is there a way I can lower my tax rate on the 1099-MISC?

 

A KEY point was that I was hired by his new university as an "independent contractor" doing research. In fact, they even made me sign a contract stating I was an independent contractor. This might have been for convenience. The reality was that I was a PhD student receiving a stipend for research performed. The total difference in taxes I am facing is around $4,200. Thank you for any help!

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Expert Alumni

I am a PhD student -- my usual stipend via W-2 (low tax) was given as a 1099-MISC this year, how can I lower my tremendous tax rate?

To report your Stipend income reported to you on Form 1099-Misc follow these steps.

  • With TurboTax open select  Wages & Income.
  • Scroll down to Less Common Income and select Miscellaneous Income, 1099-A, 1099-C
  • On the next page, select Other reportable income
  • On the page, Other Taxable Income enter Stipend in the description. 

This will put the income on Schedule 1 Line 8 of your  Form 1040, as required by the IRS.  You will pay state and federal income tax on the amount, but it will not be subject to self-employment tax.

 

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Expert Alumni

I am a PhD student -- my usual stipend via W-2 (low tax) was given as a 1099-MISC this year, how can I lower my tremendous tax rate?

Was the income reported in box 3 or box 7 of your form 1099-misc?

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Level 2

I am a PhD student -- my usual stipend via W-2 (low tax) was given as a 1099-MISC this year, how can I lower my tremendous tax rate?

The income is in box 7, Thank you!

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Expert Alumni

I am a PhD student -- my usual stipend via W-2 (low tax) was given as a 1099-MISC this year, how can I lower my tremendous tax rate?

To report your Stipend income reported to you on Form 1099-Misc follow these steps.

  • With TurboTax open select  Wages & Income.
  • Scroll down to Less Common Income and select Miscellaneous Income, 1099-A, 1099-C
  • On the next page, select Other reportable income
  • On the page, Other Taxable Income enter Stipend in the description. 

This will put the income on Schedule 1 Line 8 of your  Form 1040, as required by the IRS.  You will pay state and federal income tax on the amount, but it will not be subject to self-employment tax.

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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Level 2

I am a PhD student -- my usual stipend via W-2 (low tax) was given as a 1099-MISC this year, how can I lower my tremendous tax rate?

Thank you Leonard. This really helps. I am a novice at taxes, and this may be a very naive question: In the part of Turbotax that deals with 1099-MISC, when they ask if I received a 1099-MISC, do I just click "No"? Will I have any issues if the government thinks I said no to a 1099-MISC? The Other Taxable section says:

 

"Do not enter income reported on Form 1099-MISC"

 

and so it is ok to avoid disregard this because my school erroneously reported it on Form 1099?

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Expert Alumni

I am a PhD student -- my usual stipend via W-2 (low tax) was given as a 1099-MISC this year, how can I lower my tremendous tax rate?

No, there will not be any issues if you click "no".  You have reported your stipend on your tax return.  The stipend is correctly reported as taxable to the federal and state but exempt from self-employment tax.

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