<p>Hi, My daughter did a 1 month study abroad course last summer and her college paid for most of it. They allow students that are on scholarship to take one course or go abroad with the same tuition/FA ratio once during their 4 years.
They gave her a 1099 Misc for the full amount, 5500. If she reports it as they did, on the 1099 Misc on her taxes, she'll pay around 400. I know from talking to the IRS and TTax, that it isn't "income" but they said if the university doesn't use another form, it will have a good chance of getting flagged if you do something else.
One TT employee said to put it under education expenses on her tax form and keep the documents. Another said it wouldn't be a big charge to just pay it and not deal with the hassle. Her FA office at her school was very unhelpful since they do it this way to benefit their tax relief. She just kept saying to "Ask the IRS" I went to our local office and they said they could only go on the form submitted. </p>
<p>Any advice from parents/students that have been in similar bind? I've read on other forums of small audits that came 2 years later questioning the payment and one mother said her daughter's refund turned into a payment and they asked her to contact them. (not something I would look forward too)</p>
<p>Thanks.....of course she has an internship this summer too, but that is more "income" than a scholarship.</p>
<p>What is similar about the two situations is that the colleges are of no help beyond saying to talk to a tax preparer. </p>
<p>The IRS changed how I file for my D2 this year quickly, so I hope to be able to get everything straightened out before April 15. That’s better than a couple of year lag for the IRS to catch-up (I had this happen to my own taxes a couple of years ago and it wasn’t pleasant).</p>
<p>Yes, my daughter will be doing an internship this summer at Johns Hopkins and I told her to please ask BEFORE the summer, how they will treat her stipend.
This though was a grant/scholarship, not earnings. That is what made me angry, why say she has to pay for it as income, when the whole point was it was to make it easier for her to go. Although I had to take a small loan to pay for her sisters study abroad one summer, the school gave her 1000, there was no paperwork or forms sent, and paying off the other 3000 almost seems painless now compard to the time/energy to research this. Even the IRS isn’t that helpful, her FA office stopped answering emails after the second one.</p>
<p>My daughter’s college FA office said they think next year the IRS is changing the rules on what forms they can use especially for summer programs and aid. She agreed it was the wrong form but alas, that was what they gave and were never given much instruction on it. She told me to just put it down as what it was, mostly grant and 500 earnings and keep documentation if she is asked about it for 5 years. I do hope they make it easier for future students.</p>
<p>Well, the IRS sent my daughter a bill for 530 saying the college sent a 1099 misc form and she owed taxes. We listened to them and wrote a note, put it in as scholarship but alas, it didn’t help. I’m not sure what to do now, sounds like it will be painful. My husband says “pay it” but it wasn’t earnings as a self employed worker, I want the FA office to help.</p>
<p>So the IRS is saying your daughter owes self employment tax on money that was really a grant/scholarship, all because the school documented the payment on a 1099 MISC? If so, that’s messed up. I would be contacting the school and making people uncomfortable until someone listened. Go up the food chain as high as you need to go until someone listens and helps.</p>
<p>I have emails back and forth, they did say next year, the IRS is making it harder for them to do their bookkeeping this way. I went through 3 people and no one would change the form. They said to keep documentation. Well, I have emails. Her yearly scholarship went on the right form, just her summer one didn’t. I see on some TT forums, that is not uncommon. I spend hours last year calling her school, IRS, TT, asking an acct. They all said pretty much, it is what it is, they can’t “know it’s for a grant”. One said to just pay it, another said to put it as SCH on line 7 or 21 (forget) and put message. Guess it didn’t work. </p>