<p>thanks for the update entomom. sorry for this anticipated headache.</p>
<p>edbrady—it would seem that even if you don’t tell Turbotax, the IRS will have their ‘copy’ of the 1099 Misc and see it themselves, won’t they?</p>
<p>^That’s what it seems like to me. My D2’s income is just under the amount that needs to file, but my account advised me to submit a return anyway as the IRS will see the 1099M in a year or two and then question why she didn’t file. I think I’d rather deal with it now than down the line.</p>
<p>Brand new info. D2 has been accepted to another REU at a different university for next summer. She was given formal acceptance papers today and it had the contact info for the person in charge of stipends, travel, etc. I called and asked them how they deal with taxes. She said that they don’t file anything with the IRS (no W2 or 1099) but they do recommend talking to a tax accountant. This seems strange because it is considered taxable income.</p>
<p>I’m really frustrated at this point, as NSF funded programs, they should be consistent and they should clarify the tax ramifications for the students. </p>
<p>I feel your pain entomom. I’m going to have my d contact her internship/non profit director to request a change to the 1099. I read that’s a requirement to “remedy” the mistake on the 1099. Maybe the SS8 too? </p>
<p>Srystress, what do you think of this update? If you might be willing to comment…</p>
<p>I hate this. I had similar issues with my NSF graduate research fellowship; neither my university nor NSF were helpful and both told me to consult a tax consultant. Yes, I will consult a tax expert with my $30,000 pre-tax income, sure. Honestly universities do this to avoid paying payroll taxes on the stipends and they refuse to counsel you to avoid being sued for giving inaccurate information.</p>
<p>My university does not provide me with a 1099 for the NSF either. In January they send me a letter that basically says “You should’ve been tracking your own fellowship amounts every month, hope you did that!” I ended up reporting my fellowship as fellowship/scholarship income through TurboTax’s forms (I’m not sure what box that is on the actual forms though). For the case of the REU that doesn’t provide the 1099, that might be the way to go? I usually get taxed about 20% on the amount (federal and state income tax but not SS, Medicare and FICA, I think.)</p>
<p>Thanks for the tip juillet, that sounds like a good way to approach this coming year. Hopefully I can talk to someone at the IRS this year and that will give me a better idea how to deal with this from now on. Of course I’ll report back here with any new information, hopefully from home and not in a white collar clink somewhere @-) </p>
<p>MYTURNNOW:</p>
<p>Yes - they will have a copy and that is why I (initially) contacted UNC to ask them to re-issue the 1099M with the value in Box 3.
They were not helpful AT ALL.</p>
<p>So do I cause them heartache and file an SS-8 ?</p>
<p>EJB</p>
<p>Some links:</p>
<p><a href=“Stipend and taxes - Financial Aid and Scholarships - College Confidential Forums”>http://talk.collegeconfidential.com/financial-aid-scholarships/1472313-stipend-and-taxes.html</a></p>
<p><a href=“https://ttlc.intuit.com/questions/1746020-my-daughter-received-a-1099-misc-for-a-summer-internship-box-7-i-m-wondering-if-self-employment-income-is-the-right-way-to-declare-this-income”>https://ttlc.intuit.com/questions/1746020-my-daughter-received-a-1099-misc-for-a-summer-internship-box-7-i-m-wondering-if-self-employment-income-is-the-right-way-to-declare-this-income</a></p>
<p><a href=“Yahoo | Mail, Weather, Search, Politics, News, Finance, Sports & Videos”>Yahoo | Mail, Weather, Search, Politics, News, Finance, Sports & Videos;
<p><a href=“Yahoo | Mail, Weather, Search, Politics, News, Finance, Sports & Videos”>Yahoo | Mail, Weather, Search, Politics, News, Finance, Sports & Videos;
<p><a href=“https://ttlc.intuit.com/questions/1746020-my-daughter-received-a-1099-misc-for-a-summer-internship-box-7-i-m-wondering-if-self-employment-income-is-the-right-way-to-declare-this-income”>https://ttlc.intuit.com/questions/1746020-my-daughter-received-a-1099-misc-for-a-summer-internship-box-7-i-m-wondering-if-self-employment-income-is-the-right-way-to-declare-this-income</a></p>
<p><a href=“Stipend and taxes - Financial Aid and Scholarships - College Confidential Forums”>http://talk.collegeconfidential.com/financial-aid-scholarships/1472313-stipend-and-taxes.html</a></p>
<p>OK, got the letter yesterday, another interesting repercussion of receiving income via the 1099M and reporting it on Line 21. </p>
<p>The change the IRS made was in the calculation of the Standard Deduction for a Dependent. I included the REU and WS income in the calculation and came out with a number larger than the SD, so I used the SD amount. The problem is, that when doing the worksheet for the SD, Line 1, Earned Income is:</p>
<p>
</p>
<p>So, Line 21, where the bulk of her income came from was not included by the IRS. Therefore, they only counted the relatively small WS income and came out with a reduced SD. And since this smaller SD is subtracted from the AGI WITH the REU income, there is a large tax due.</p>
<p>The IRS won’t talk to me until D2 gives her authorization to do so (she’s off on spring break), so…to be continued.</p>
<p>Oh man, my head is spinning now. </p>
<p>Walking down Broadway in NYC laughing out loud. </p>
<p>UNC just called and said they were issuing a corrected 1099M with most of the amount moved from box 7 to box 3</p>
<p>The remaining $1,000 stays in 7 because it was for meals?</p>
<p>Let’s make this even more difficult. </p>
<p>It really shouldn’t be this difficult!</p>
<p>agree…any update entomom?</p>
<p>Not yet. D2 forgot to call yesterday, this morning she had a problem getting through, she’ll try again this afternoon. I’ll talk to the IRS tomorrow at the earliest.</p>
<p>Update, but no resolution on the issue of REU stipends and self-employment tax.</p>
<p>After many hours of waiting to talk to the IRS by both D2, myself and both of us together (aggravated by long wait times and a very poor/erratic/inconsistent automated phone system), the IRS correction to her taxes has been resolved. They concluded that the IRS should have considered her earned income on Line 21 in calculating her Standard Deduction, so her taxes stand as I submitted them. </p>
<p>The agent told me that supposedly what will help key them into counting line 21 income in the calculation of the Standard Deduction for Dependents is stating something like it is ‘earned income from fellowship’. I had put, ‘income from internship; not subject to self-employment’, as I was more concerned about the self-employment part than the fact that it was earned income. Is the IRS system really smart enough to catch that subtlety or will they just ignore anything in line 21? I’m not so sure. </p>
<p>As far as the larger question of self-employment tax? That’s going to be one of my questions the next time I talk to my accountant. For now, I’m just sticking to how I did it until I find out in a year that it was wrong. :-SS </p>
<p>This is a good discussion and from my research including this thread I plan to simply add the REU 1099 Misc amnount to line 7 (Wages, tips,…) and let the software figure out what should have been taken out. This will increase the standard deduction (SD) and probably result in a much lower tax lianility or possibly small refund. Even the IRS pubs and court rulings mentioned and documented it sounds like REU colleges don’t really have a way to report tax free / grant money to students so they use the 1099 . It simply makes no sense that if a student makes the same amount year to year with one year being all reported as W2 income and the second year being part W2 and pure additional income (1099Misc) that the latter would produce a substantial tax liability simply because the 1099 doesn not calculate the proper SD, unless you hope the IRS reads the footnotes properly. I say go with line 7. Great discussion. </p>
<p>Supporting Line 7, will need to add the amount without a W2 and not thru turbotax (their screens don’t prompt you for this ) See <a href=“Publication 970 (2022), Tax Benefits for Education | Internal Revenue Service”>Publication 970 (2022), Tax Benefits for Education | Internal Revenue Service;
How you report any taxable scholarship or fellowship income depends on which return you file.
Form 1040EZ. If you file Form 1040EZ, include the taxable amount in the total on line 1. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 1.
Form 1040A. If you file Form 1040A, include the taxable amount in the total on line 7. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7.
Form 1040. If you file Form 1040, include the taxable amount in the total on line 7. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7.
Schedule SE (Form 1040). To determine your net earnings from self-employment, include amounts you receive under a scholarship as pay for your services that are reported to you on Form 1099-MISC, Miscellaneous Income. If your net earnings are $400 or more, you must pay self-employment tax. Use Schedule SE, Self-Employment Tax, to figure this tax.
Form 1040NR. If you file Form 1040NR, report the taxable amount on line 12. Generally, you must report the amount shown in box 2 of Form(s) 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. See the Instructions for Form 1040NR for more information.
Form 1040NR-EZ. If you file Form 1040NR-EZ, report the taxable amount on line 5. Generally, you must report the amount shown in box 2 of Form(s) 1042-S. See the Instructions for Form 1040NR-EZ for more information. </p>