Who gave you the scholarship? Someone other than the school, such as a civic organization?
<a rel="nofollow" target="_blank" href="http://www.finaid.org/scholarships/taxability.phtml">http://www.finaid.org/scholarships/taxability.phtml</a>
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/2443834-scholarship-reported-on-1099-misc">https://ttlc.intuit.com/questions/2443834-scholarship-reported-on-1099-misc</a>
What box on the 1099-MISC is the income reported in?\
Understand that all scholarship money is "INITIALLY" reported as the taxable income it is. It's taxability is offset by the "qualified" education expenses it is used to pay for. Any scholarhip monies not used for qualified expenses is taxable income to the recipient.
It is found on Box 3 "other income" -- as mentioned earlier, the scholarship was provided by a scholarship foundation. Thank you.
Scholarships are only tax-free up to the amount of qualified education expenses (tuition plus certain other required expenses). If this scholarship is less than your tuition, it is tax free. There are a couple of ways to handle it in turbotax, I don;t have them at the top of my head but @Carl can probably tell you.
Enter the 1099-MISC under the Personal Income tab. I think it's in the Other Common Income section. It's IMPORTANT you pay attention to detail and read each screen. Otherwise, you'll miss it and it will be treated as self-employment business income and you'll be taxed on it at a higher rate.
You'll deal with the deductibility of it from your taxable income in the Education section, when you get to it.
Hi Carl -- thanks. As I was searching through this, I noticed a link that SweetieJean pointed me towards. In that post, I am assuming you wrote the following: "Don't enter that 1099-MSIC anywhere, except in the education expenses section under the Deductions & Credits tab. As you work through the education expenses, you'll enter it where it asks for scholarships/grants not reported on the 1098-T. The taxability of it will be offset by "qualified" education expenses. "
My taxability remains unaffected if I report that 1099-Misc under the "scholarships/grants not reported on the 1098-T."
Should I do that instead? Thanks.
I also found this from TurboTax:
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/2105653-1099-misc-scholarship-in-box-3">https://ttlc.intuit.com/questions/2105653-1099-misc-scholarship-in-box-3</a>
You would need to enter the 1099 misc under the Education section as a 1098-T for scholarships. To enter the information please do the following:-
Log into your TurboTax account
Click Personal on the left
Click Deductions & Credits
Click I'll choose what I work on
Scroll down to Education
Click Start next to Expenses and Scholarships (Form 1098-T)
Enter the information until you reach a page Did You Receive a 1098-T in 2013?
Click No and click continue
Here enter all the information until you reach Scholarships and Financial Aid click continue
If I recall correctly, I think TT 2015 now has a question in the education section that asks if your scholarship is reported to you on a 1099-MISC. If so, then of course, answer that question affirmatively. I would "expect" the program to then tell you to enter it where I said to above. But I'm not sure, as it's been a few years since my last kid finished college. Let me know.
I'm not familiar with the interview questions, but that sounds like how you need to enter the scholarship.
HOWEVER, the IRS will still be 'looking' for the 1099-MISC elsewhere, usually on Line 21 ("other income"). I would ALSO report it there, then enter it again as a negative number so it effectively cancels out the first one. That way the IRS will 'see' it reported on Line 21. Again, I'm not too familiar with the navigation of TurboTax, but this link may help you figure out how to do that.
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/2253986-how-do-i-claim-my-1099-misc-box-3-other-income-more-expenses-than-income-can-i-deduct-enough-expenses-to-cancel-the-income">https://ttlc.intuit.com/questions/2253986-how-do-i-claim-my-1099-misc-box-3-other-income-more-expenses-than-income-can-i-deduct-enough-expenses-to-cancel-the-income</a>
Bill, read the final commet in your referenced thread. 🙂 I'm stilling looking for my boiler on entering a 1099 that is not self-employment income. When I find it, I'll post it in this thread.
The referenced thread is talking about Hobby expenses (which can't be done that way), but the procedure is presumably correct to explain how to enter a 1099-MISC with box 3 and then canceling it out again (which is correct for this circumstance).
Found it!
Under the Wages & Income tab (or Personal Income tab) scroll down to Other Common Income and elect to start/update Income from form 1099-MISC. Then click YES to indicate you have a 1099-MISC.
Enter the 1099-MISC exactly as printed, and then Continue.
Enter the reason you got this money – be it scholarship, bonus, streaking butt naked across the 50 yard line of the super bowl, whatever. Then continue.
Select None of these apply, then Continue.
Select No, it didn’t involve work….. and Continue.
Select ONLY the tax year for which this specific 1099-MISC was issued. Do not select the year that you received the 1099. Select the year for which the 1099-MISC was issued. Select no other year. Then Continue.
Select No, it didn’t involve an intent to earn money, then Continue.
Select NO, then Continue.
Click the DONE button, and that does it.
@nmolinajr because the scholarship was reported on a 1099-MISC, you need to report it in three places.
1. Add it as other income from a 1099-MISC as described in Carl's answer. Make sure you indicate box 3, and answer all the work-related questions "no" (not an intent to earn money, not for work, etc.)
2. Go back to the Other Income section and add it under "other reportable income" at the very bottom of the income section. Call it something like "scholarship offset" and use a negative number. This will cancel out the taxability of the income.
3. In the Education section of the Deductions and Credits page, you need to enter your 1098-T for tuition expenses. Keep going in that section and you will be asked about scholarships. Enter the scholarship again. This is necessary because you can't get a credit for expenses that were paid with tuition, so the program takes your tuition and subtracts the scholarship to see how much is left over for the tuition credits.
Note this only applies if the scholarship is less than your qualified expenses for tuition and required supplies. If your scholarship is more than tuition, and you used some of it for room and board or other expenses, then that part is taxable and we have to make some different adjustments. Let us know if you need to do that.
Actually, you just report it as income per my above so it's not treated like business income. Then it's taxability will be offset by the qualified education expenses claimed in the education section. Remember, a scholarship is "initially" reported as taxable income, with it's taxability offset by the qualified education expenses it's used for. Then anything left over is automatically reported on line 21 by the program as taxable income with the annotation of "SCH" next to it.
I don;t think so, I just tested it. If I enter a 1099-MISC for $5000, a 1098-T for $14,000, and put the scholarship after the 1098, it does NOT back out the 1099-MISC from line 21. The problem is that a 1099-MISC can be for anything and turbotax does not have a way to link up the 1099-MISC in the income section to the scholarship in the education section. The 1099-MISC could be for a line dancing contest. Plus the fact that the IRS instructions say that a 1099-MISC should NOT be used for scholarships, so why should the program expect to link them?
And actually, I don't like the idea of reporting it at all as income. The 1099-MISC instructions specifically say that the form is not to be used for scholarships. I would advise the taxpayer to go back to the payer and point this out to them in the instructions, and ask them to cancel the 1099-MISC with the IRS. If that doesn't happen, I would almost rather leave it off the tax form entirely, rather than create an income entry with a phantom offset. The IRS will send a CP2000, but the taxpayer can explain with the appropriate documents (tuition bills, letter of scholarship award from the payer, etc.) I'm not sure why the majority of superusers think that reporting the 1099-MISC and then reporting a phantom negative offset won't look questionable to the IRS.
I just tested it, and have discovered we didn't test the same way. Apparently, (I think) you are assuming the 1099-MISC monies are reported on the 1098-T in the scholarships box 5. If so, your method is correct.
If the monies reported on the 1099-MISC are not included in box 5 of the 1098-T, then my method is correct.
However, leaving the 1099-MISC off the tax return entirely is a bad decision. It will eventually result in the hassles of having to deal with a CP-2000 that might not be received until 2 or more years later. Having to dig through paperwork from a few years ago, one can easily get confused or could possibly even have forgotten the details surrounding it, and end up paying taxes, fines and penalties when if done right the first time, would never occur.
No, I used a 1099 from a third party payer not on the 1098. Such as if the scholarship was awarded by a civic group, contest, or foundation. Enter as income, also enter as a scholarship not on a 1098. Does not seem to be accounted for.
I assume that any internal college scholarship would simply be taken off the tuition bill and not 1099ed. I'm guessing that came from a private payer. And I can't make that work the way you suggest.
One must be careful which prior post they reference. some of them are 2 years old, and t hings changed in TT 2015. For example, in TT 2015 in the education section, you are asked if any of the scholarship money was reported on a 1099-MISC. This question is not asked in prior year's versions. So referencing a question/answer from the 2014 tax season and earlier is not advised.
Any follow up on this issue? I have exactly the same issue this year. My am working towards a grad degree and got a $3000 scholarship from school, my tuition fee is above $10k. The school issued me a 1099-MISC, my education credits is almost wiped by this $3000 income. I read a few online posts and many believe that the school didn't follow 1099-MISC instruction and disreported scholarship s 1099-MISC,
“Scholarships. Do not use Form 1099-MISC to report scholarship or fellowship grants. Scholarship or fellowship grants that are taxable to the recipient because they are paid for teaching, research, or other services as a condition for receiving the grant are considered wages and must be reported on Form W-2. Other taxable scholarship or fellowship payments (to a degree or nondegree candidate) do not have to be reported by you to the IRS on any form.”
and suggest this:
If you receive a 1099-MISC that reports your fellowship income, you should report it as fellowship/scholarship income rather than as 1099-MISC “other” income.
This is to say ignore the 1099-MISC and reported it as scholarship in the education section, which is similar to Opus answer. IRS know what you are doing, and will accept that it's the school misreported 1099-MISC.
FYI:
<a rel="nofollow" target="_blank" href="http://pfforphds.com/what-is-a-1099-misc/">http://pfforphds.com/what-is-a-1099-misc/</a>
Even these 2 links below this page has totally different opinions:
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/3079277">https://ttlc.intuit.com/questions/3079277</a>
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4003621">https://ttlc.intuit.com/questions/4003621</a>