Student at U A worked summer for U B. Got paid, housing was free. U B says no W2: Tax forms are no longer sent for stipend payments. students to refer to IRS Topic 421.

[PatriciaV]

IRS Topic 421 provides information on the taxation of Scholarships, Fellowships, and Grants. Please review the following to see how this might apply to the payments and free housing you received from U.B.

Tax-Free

If you receive a scholarship, a fellowship grant, or other grant, all or part of the amounts you receive may be tax-free. Scholarships, fellowship grants, and other grants are tax-free if you meet the following conditions:

• You're a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities; and
• The amounts you receive are used to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses at the educational institution.

Taxable

You must include in gross income:

• Amounts used for incidental expenses, such as room and board, travel, and optional equipment.
• Amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant. However, you don't need to include in gross income any amounts you receive for services that are required by the National Health Service Corps Scholarship Program, the Armed Forces Health Professions Scholarship and Financial Assistance Program, or a comprehensive student work-learning-service program (as defined in section 448(e) of the Higher Education Act of 1965) operated by a work college.

[kczmudzin]

This wasn't my question.  The problem is with reporting research stipend when the university doesn't send W2 anymore.  Topic 421 also tells us how to enter that money on a paper return (i.e., "SCH") but TurboTax doesn't have the equivalent procedure.  So I used the following situation to report what amounts to taxable income but one that doesn't require self-employment taxes.

I was paid a research stipend from my university and they sent me a 1099-MISC with the paid amount reported in box 7. How do I report it as income without it being SE?

by juurewee•5•Updated May 12, 2021

I was paid $2,700 for doing research in a lab. To my understanding, this should not count as self-employment income, and of course I wouldn't want to pay SE tax on it. Are there steps I can take on TurboTax to report it accurately without it counting as self-employment? Should my school have reported the $2,700 in box 3 instead? If so, should I get them to re-file it? 

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Best Answer

by TurboTaxIsabellaG

You are correct,  this should not be reported in box 7 of a 1099-MISC.  See the instructions for 1099-MISC: https://www.irs.gov/pub/irs-pdf/i1099msc.pdf (page 2). You may have already read this.

" 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." 

If you can't get the payer to correct the 1099-Misc, I would still report the income as wages, but be prepared to provide verification of your status if the IRS questions you.

1. Go to Federal Taxes>   Wages and Income.
2. Scroll to the Less Common Income section and choose Miscellaneous Income (the last choice). 
3. Choose Other income not already reported on a Form W-2 or Form 1099.
4.  Answer Yes on the Other Wages Received screen.
5. Continue past Wages Earned as a Household Employee and Sick or Disability Pay.
6.  Answer Yes on the Any Other Earned Income screen.
7.  Choose Other on the Enter Source of Other Earned Income screen.
8.   Enter your fellowship information on the Any Other Earned Income screen.

This will report your fellowship on line 7 of your Form 1040. You will not pay SE tax on this stipend.

[Edit 03/11/18 11:50 AM]