REPORTING STIPEND FROM 1099-NEC

[KATSER]

My husband attended several workshops over summer and received stipends for attending. The stipends were reported on 1099-NEC forms. Should this income be reported as a business income and, if yes, will I be able to deduct the cost of attendance (travel expenses, mileage, lodging, meals)?

Thank you in advance for your help!

[AmyC]

1. Attended workshops could be he was the speaker and this was business income.    Let's take a look at  Earning side income: Is it a hobby or a business? which lists 9 factors after stating that a hobby is for recreation, not for profit:

• Whether the activity is carried out in a businesslike manner and the taxpayer maintains complete and accurate books and records.
• Whether the time and effort the taxpayer puts into the activity show they intend to make it profitable.
• Whether they depend on income from the activity for their livelihood.
• Whether any losses are due to circumstances beyond the taxpayer's control or are normal for the startup phase of their type of business.
• Whether they change methods of operation to improve profitability.
• Whether the taxpayer and their advisors have the knowledge needed to carry out the activity as a successful business.
• Whether the taxpayer was successful in making a profit in similar activities in the past.
• Whether the activity makes a profit in some years and how much profit it makes.
• Whether the taxpayers can expect to make a future profit from the appreciation of the assets used in the activity.

The IRS has many resources to help taxpayers report their income correctly. See the more information section below for additional guidance.  

2. If this is business income, see Where do I enter Schedule C?  and Where do I enter my self-employment business expenses, like home office, vehicle mileage, and suppli...

If this is for a hobby, follow these steps:

1. Log in to your return.
2. Go to income
3. Scroll down to Other Common Income
4. Select Income from 1099-MISC
5. Edit/ Start/ Revisit
6. Enter income -the income should be in box 3,
7. Enter tax if any withheld in box 4
8. Continue
9. Describe the reason -
10. continue
11. None of these apply
12. Continue
13. Did this involve main job?
14. No
15. Continue
16. How often do you get?
17. Got in 2024
18. Continue
19. Intent to earn money?
20. No
21. Continue
22. Do you have another?
23. No
24. Continue

More Information:

Publication 17, Your Federal Income Tax

Publication 525, Taxable and Nontaxable Income

Publication 535, Business Expenses

Publication 334, Tax Guide for Small Business, For Individuals Who Use Schedule C

[KATSER]

The stipends were reported on 1099-NECs. My husband is a teacher so technically they are connected to his main career, however, they were not paid by his current employer but rather by the universities that were hosting the workshops. If I report these as business income and start deducting expenses I will end up posting a loss. I can declare it as an income from a "hobby or sporadic activity" in which case it will not be taxed as a business income. Also, it doesn't look like this type of income meets any of the nine points. Which seems a more reasonable choice?

Thanks again!   

[AmyC]

If it does not meet any of those 9 points, it is hobby income. If he ends up doing more and it becomes a regular activity and relied upon for income, then you can switch to a business form later.