How to Handle Fellowship Stipends not Subject to FICA

Forum|Forum|5 years ago
February 25, 2021
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How do we handle reporting fellowship income that is not supposed to be subject to FICA taxes (as it is not wages earned for a service provided)? From my understanding, the Fellowship stipend is subject to federal income tax, but NOT Medicare/Social Security tax (FICA).

I receive a stipend from the NDSEG fellowship, and they sent me a 1099-NEC, but when I try to enter the NEC in Turbotax it then tells me I'm a self-employed business owner, which is not the case at all.

I tried instead ignoring the 1099-NEC and just entering the fellowship stipend on the page after I filled out my 1098-Ts, but when I did that, all of a sudden the 'estimated tax refund' went from like +1000 to -300ish, and I'm pretty sure it's because internally TurboTax things that money is subject to FICA taxes. I did all of the math late last year on how much I would owe in estimated taxes, and I paid estimated taxes and entered that in, so I'm not quite sure how to handle this.

linaj20201

You have two options:

1. You can contact the school for a corrected tax form. This amount should be reported on a Form W-2, not 1099-NEC.

2. You can enter the information under the 1099-NEC section in the TurboTax program, however, you will need to fill out a Form 8919 and SS-8. Here are the steps:

In TurboTax online,

Sign into your account, select Pick up where you left off
From the upper right menu, select Search and type in 1099nec and Enter
Select the Jump to 1099nec
Follow prompts
On screen, " Does one of these uncommon situations apply? select "it should be reported on W-2"
Follow prompts to continue

Students working for the same school they’re enrolled at may be temporarily exempt from paying Social Security taxes. However, only students who obtain employment because of their enrollment qualify. For more information, click here: Who is exempt from FICA