by TaxManCometh » Wed Feb 11, 2015 12:28 am
=== this is not official tax advice, just one man's opinion, you cannot sue me if this is wrong and you get screwed ===
For 3 years I put the income on Line 7 ("Wages, salaries, tips, etc."), indicated to the side as "SCH" for scholarship income. But, I counted it all as taxable scholarship income since I did not have "eligible educational expenses" that I paid, which could have been counted as non-taxable income. Since ASEE paid tuition/fees directly to the school, my stipend was just used for my living expenses, which are NOT tax-exempt. I suppose if I bought a textbook that was required for a class, I could have counted that amount as non-taxable. But, I was basically done with classes (PhD student) when I started with SMART, and I did not want to worry about keeping a receipt to prove I bought a required book for $100, thus reducing my tax burden by $0.05 (or whatever).
As others have said, the scholarship is NOT self-employment income, at least not the stipend given during the school year. Look at the IRS definition of scholarship income vs. self-employment income. You are receiving money for the sole purpose of supporting yourself while pursuing a college education. That's a scholarship, plain and simple. Why did ASEE decide to report the income on a 1099-MISC? I don't know. But do not assume that they did this after some grand assessment and thorough review of tax code and proper practice. I'd bet it was just the easiest way to do it, so they did it. By reading this forum, you should know to never assume that anything the SMART Program does has been done with careful, thoughtful, and rational analysis.
Now, the extra money from the internship support payments is a different story. I've heard of different interpretations of how to treat that money, and I'll avoid getting into those details...
=== this is not official tax advice, just one man's opinion, you cannot sue me if this is wrong and you get screwed ===
For 3 years I put the income on Line 7 ("Wages, salaries, tips, etc."), indicated to the side as "SCH" for scholarship income. But, I counted it all as taxable scholarship income since I did not have "eligible educational expenses" that I paid, which could have been counted as non-taxable income. Since ASEE paid tuition/fees directly to the school, my stipend was just used for my living expenses, which are NOT tax-exempt. I suppose if I bought a textbook that was required for a class, I could have counted that amount as non-taxable. But, I was basically done with classes (PhD student) when I started with SMART, and I did not want to worry about keeping a receipt to prove I bought a required book for $100, thus reducing my tax burden by $0.05 (or whatever).
As others have said, the scholarship is NOT self-employment income, at least not the stipend given during the school year. Look at the IRS definition of scholarship income vs. self-employment income. You are receiving money for the sole purpose of supporting yourself while pursuing a college education. That's a scholarship, plain and simple. Why did ASEE decide to report the income on a 1099-MISC? I don't know. But do not assume that they did this after some grand assessment and thorough review of tax code and proper practice. I'd bet it was just the easiest way to do it, so they did it. By reading this forum, you should know to never assume that anything the SMART Program does has been done with careful, thoughtful, and rational analysis.
Now, the extra money from the internship support payments is a different story. I've heard of different interpretations of how to treat that money, and I'll avoid getting into those details...