2

I am a grad student, and am supported by a living stipend from a government supported fellowship program. The contracted company managing this program sent everyone MISC-1099 forms, and reported the stipend payments in box 7.

The tax program I'm using (FreeTaxUSA) requires me to fill out information for Schedule C if I enter the 1099-MISC as I received it. However, that subjects me to SE taxes, which is incorrect, as per this document: https://www.irs.gov/pub/irs-pdf/p970.pdf.

If I simply don't report the MISC-1099 form, but do report the income (correctly - as a scholarship in 'other income'), then I'm afraid the IRS will question why I didn't report the MISC-1099.

How do I deal with this?

(I've seen at least one potential way forward, but it seems a little questionable to me. I'll post it as an answer below for discussion.)

argentum2f
  • 191
  • 5

1 Answers1

2

One recommendation I have seen, is to go ahead and file the 1099-MISC as normal. Then enter the full amount as a 'business deduction' (i.e. nullifying the impact of schedule C), then enter the full amount the proper way - as scholarship income. This way the MISC-1099 is reported, and I pay taxes as I should.

This recommendation comes from a TurboTAX Q&A: https://ttlc.intuit.com/questions/3784995-1099-misc-for-a-stipend-payment-where-do-i-put-it

argentum2f
  • 191
  • 5