Last year, I had done an internship which gave a stipend at the end of it. We were only required to sign a W9 form for it and nothing else.
I am not filing taxes and I don’t know whether I should include that money or not as I have gone to 2 different financial aid offices for school (Community college district) and 2 have said yes while 2 have said no.
I am not sure whether I should or not include that amount in wages earned and when it also asks for total current balance regarding savings accounts.
(1) Unless I’m mistaken, the stipend is taxable income (if you’d earned enough during the year to have to pay taxes), but is not considered wages.
(2) It doesn’t matter whether the money in a checking or savings account came from the summer stipend, job earnings, a birthday gift, or just fell out of the sky, if it’s in your account (or under your mattress), you have to declare it.
Sounds like earned income to me (which should be reported) but if you don’t get a 1099-MISC, I’d probably ignore it. When you say you’re not sure if you you should include this amount “when it also asks for total current balance regarding savings accounts,” I’m unclear what “it” refers. The IRS does not ask for your bank balances. If you are talking FASFA, I think the answer is yes, you should include it. That is, do not deduct that amount from your ACTUAL balance.
If the stipend was more than the cut-off for self-employment income, the place where you interned probably will be required to you a 1099 and you will need to file the federal 1040 with scheduled C and SE. If you aren’t certain about the status of that stipend, call their payroll office and ask.
@dodgersmom The amount was $750. So I wouldn’t have to include it in the wages, but I would have to include the current amount I have in my savings account?
@AboutTheSame Yeah it’s the FAFSA. Sorry about that. The last part threw me off, would that mean I would have to include not only the stipend, but everything that was already in the account (I only have money from financial aid in my accounts)
@happymomof1 What would be considered the cut off? I will contact them just in case.
It’s probably earned and taxable income, but not necessarily wages, and if that’s the case, you would include it as income on the FAFSA. And yes, if the money from the stipend is still in your savings account at the time you file FAFSA, you need to report it as an asset.
$400 per year is the threshold for reporting, and paying self-employment tax on, self-employment income.
@BelknapPoint That wouldn’t mean I would have to file taxes then?
The fafsa asks how much I earned I’m working. So would I have to input the amount there or only in the portion the portion that asks how much I have currently?
Yes, if you have $400 or more in self-employment income, you need to file a tax return.
Like I said before, it probably counts as earned income, and if so you would report it as such on FAFSA. Any assets you have on the day that you file FAFSA that are not otherwise excluded also get reported; this would include money from your stipend that you have in a savings account.
It does count as earned income, and you will need to file taxes. If you earned less than this year’s income protection allowance on the FAFSA (google it), the income won’t affect your EFC (but you will still have to list it on your FAFSA).
Any assets (cash, money in your bank, etc) is counted at 20% as a student. This also has to be listed.
It seems odd to count previously awarded financial aid funds as an “asset” since it’s money that school & applicant would both expect to be used up. I agree that OP has to report the current bank balance, but I hope there’s a place to explain exactly what X amount of that balance is.
Taxable grant and scholarship money is not counted as FAFSA income. Neither is work study income or income from work under a cooperative education program offered by a college. If OP’s stipend counts as any of this stuff, it’s not reported on FAFSA. OP needs to figure that out.
Likewise, “student financial aid” that the student has in hand (in a bank account, under the mattress, etc.) is not included in reported assets.
@BelknapPoint Ah I see. I wasn’t aware of that. Although is there anything different I would have to do since I am a dependent.
@CourtneyThurston Is the 20% regarding the EFC? So far I find the income allowance being $6260, which is way more than I earned so that would not effect EFC then?
Let’s suppose you made $5000, and had $3500 sitting in your bank account after taxes and expenses.
You would report $5000 in income on your FAFSA.
You would report $3500 in assets on your FAFSA (in addition to any other money that you have, from sources other than the internship).
The $5000 in income is below the $6260 income protection allowance, so 0 counts towards your EFC.
There is no asset protection allowance for students, so 20% of the 3500 counts towards your EFC: your EFC is now $700 higher.
@AboutTheSame So far the only money I’ve had in the account is money given through financial aid. This is just the first time I’ve gotten money where it hasn’t come from financial aid so that’s why I’m a bit clueless in this kind of situation.
@BelknapPoint No the money isn’t any of that. I was checking and I found this
https://www.irs.gov/uac/About-Publication-501
I am a single dependent and on Table 2, option No, I don’t think I would have to file a tax return.
'm just nervous since I don’t want to write the wrong thing and end up in a bad situation.
@CourtneyThurston I see, so those $700+ would be how much I would be able to contribute on my end?
Your EFC is the bare minimum a college will expect your family to pay. In the vast majority of situations, you will end up paying more.
It IS earned income. I have worked internships. It is NOT money from FA, and it IS taxable. Just to clarify since there seems to be confusion in this thread.
@for79456 : I;m as baffled as you are. I don’t think @BelknapPoint quite got the point I was trying to make. BP, if OP has $3500 in a bank account that comes only from a financial aid award, it’s not really an asset. Or, is it? That’s the part that seems weird to me.
I suppose (he says, rubbing his chin and looking very serious) you could go to the bank, get a cashier’s check payable to yourself for most of the balance, file your FAFSA with the remaining balance, and then put the money back … but that doesn’t seem legitimate and it doesn’t seem that you ought to have to go through that rigmarole.
@AboutTheSame - I don’t think that ^^^ would work, because you’d still have to list the cashier’s check as an asset.
@for79456 - It sounds like you do have earned income, and while you are looking at Table 2 of Publication 501, (as a dependent) but you need to keep reading the instructions on page 3 under dependents, where is says
and then Table 3, adds
No, a financial aid award is not reported as an asset on FAFSA. Here’s what FAFSA question 41 says:
41. As of today, what is your (and spouse’s) total current balance of cash, savings, and checking accounts? Don’t include student financial aid.
But OP’s stipend, and any amount from it in a bank account or otherwise in OP’s possession, isn’t from a “financial aid award.”
If it’s a FAFSA reportable asset, it doesn’t matter if it’s in a bank account, dollar bills under your mattress or in a cashier’s check made out to yourself… it needs to be reported.
I feel like this conversation is veering off track. OP’s stipend from WORK is not a financial aid award as @BelknapPoint correctly points out. It is taxable, OP will have to list income and assets etc on the FAFSA. I have been in the same situation before and that’s how it works.
Courtney, if you received a “stipend,” was it reported on a 1099 and was it considered self-employment income?