Grad student stipend and fellowship with not 1099 or W-2

Forum|Forum|3 years ago
April 5, 2023
2 replies
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My daughter, the grad student, received monies in the form of stipends and fellowships. She did not receive any W-2s or 1099s for said funds. How do these funds get categorized/input in TT?

Hal_Al

Employee

Enter as scholarship income.

In TurboTax (TT), enter at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

-Scroll down to:

--Education

--Education Expenses and Scholarships

After entering your 1098-T (or answering no to having a 1098-T, answer yes to qualifying for an exception [that gets you to the entry screens]). You will have to go thru the whole education interview to get to the scholarship screen. At the scholarship screen, enter the amount of the stipend. When asked if any was used for room and board, answer yes. Then enter the amount you want to be taxable (usually all of it), in the pop up box. R&B are not "qualified expenses". So, this is how you tell TT that it is taxable. Note the wording at that screen “or other expenses”. You didn’t have to literally use the stipend for R&B.

It goes on line 8r of Schedule 1 (that line is new for tax year 2022).

Vanessa A

To enter her income from her stipends and fellowships click the following:

Federal
Income and Expenses
Scroll down to Less Common Income and click Show More
Start next to Miscellaneous Income
Start next to Other Reportable Income

This will put it on line 8z of her schedule 1 as other income which will be taxed at her ordinary tax rate.

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Hal_Al

Employee

You now have two answers telling you to do it differently. Neither answer is wrong, The income can go in either place. It is usually better, for a student-dependent, if it is entered on line 8r, of Schedule 1, as scholarship.

"Other income", on line 8z of Schedule 1, is classified as unearned income. Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $12,950 filing requirement and the dependent standard deduction calculation (earned income + $400). It is not earned income for the kiddie tax and other purposes (EIC. IRA contributions).

A dependent's standard deduction is the higher of $1150 or his earned income + $400, but not more than $12,950. Example: student-dependent's only income is $8000 stipend, not on a W-2. If he reports it as other income, his taxable income will be $8000 - 1150 = $6850. If he reports it as scholarship, his taxable income will be $8000 - $8400 = 0.