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

[rbillings95]

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.

[thectmillers]

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.

[TomK · Accepted solution]

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]

[TomK]

I have updated my answer.  Hope this helps now.

[j987654321]

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!!

[geronimo682004]

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.

[J3Weaver]

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?

[janetstebbins6]

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. 

[dandonna]

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.

[jaderenee1021]

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?

[ToddL99]

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. 

[dblasband]

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?

[Irene2805]

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

[dblasband]

What do I do about the  improperly issued 1099 NEC, then?  Just ignore it?  Won't this be a red flag?

[PattiF]

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.