Income from Training Grant

[lcamassarelli]

My wife is a postdoc at UCLA and for more than 3 years she was at payroll with W2, including the first half of 2016. Since July 1st 2016 she has been receiving a stipend from a Training grant.
The taxable scholarship/fellowship/grant awards has a total amount of $24,576
This is a training grant. The grant is funded by NIH and paid by UCLA where my wife works. It is not a grant for Education and indeed we did not receive 1098T. How should I report this income in Turbo Tax application?

[GeoffreyG · Accepted solution]

Academic institutions, research facilities, and certain government agencies (like the National Institutes of Health, or NIH) will often do that, especially at the graduate and postdoctoral levels.  It would be really helpful if all schools and programs would issue actual tax documents, but not all do.  It's certainly not an uncommon occurrence; but yes, the grant (or fellowship or stipend) income received is still considered taxable compensation.  As such, you do (legally) need to declare it and report it on your income tax return.

This can be accomplished in the TurboTax program, both in the online (web-based) software as well as in the desktop versions of the program.

The mechanical steps to do so are outlined at the following AnswerXchange post from a few years ago:

https://ttlc.intuit.com/questions/2638576-how-to-report-a-fellowship-stipend

Those general processes remain accurate for the current (2016) tax year of the TurboTax program (i.e., either of those described will work just the same).

Both as a test of this, and as demonstrable proof for this answer, I ran a (hypothetical) academic fellowship of $3,000 through the federal tax program.  In fact, I did it in both of the ways described on that other post, and the results came out just as expected, without any errors present.  (Please see the attached screen-capture image for a visual aid; simply click to open.)  As desired, the notation "SCH" appeared on Line 7 of Form 1040, and the $3,000 test amount was added to taxable wages.

I have full confidence that this method will work for your tax return, too.  Just substitute the annual fellowship income total you have from your personal records for the $3,000 used in the demonstration example.  The good news is that, while your fellowship income is taxable as ordinary income, at least you do not have to pay Social Security and Medicare taxes on it, as you would if the income were alternatively taxed as ordinary W-2 wages.

With respect to the W-2 received for the January through June period of the year, you should enter that income normally as regular wage income, just as you would with any other W-2.

Thank you for asking this important question, and good luck with your professional activities.