CPA tax summary

General Discussion for SMART Scholarship Recipients
smart201702

CPA tax summary

Post by smart201702 »

I went to a CPA to do my taxes today. Afterwards I made the following notes so that I can just do it on turbotax next year and save money. I am sharing my notes so you can save money and I would love it if you shared your specific and detailed notes with me also. If you disagree with anything, please references your sources to help us all out.

My CPA originally said that we would have to put the income as self-employed since it was in box 7 of the 1099-misc. I then explained to him the nature of the scholarship and shared with him the following statement made by SMART on its website:
You are considered an independent contractor, and not self-employed, and are not employed by either the United States Government or Scholarship America.
https://smartscholarshipprod.service-no ... ca7c961968
(And we both agreed that statement makes no sense given that the IRS says
If you are an independent contractor, you are self-employed.
https://www.irs.gov/businesses/small-bu ... or-defined)
After sharing that, he said it would be reasonable to report the income as being in box 3, but required me to sign a piece of paper saying I wanted to do that--which I did. He said that the statement by SMART would serve as a reasonable rebuttal if the IRS contacted me about it. He also suggested not reporting the whole amount in 3, but rather the amount in 3 minus the mandatory expenses like traveling to visit my sponsoring facility--only after he verified that I had the receipts if I was contacted by the IRS. I think his suggestions were reasonable given the information from SMART and I (along with my CPA) feel fairly confident I could defend my decision.

Given the direct contradiction with the IRS above, I think SMART has created a nonexistent tax situation. I'm not sure why. I remember seeing someone say that they think SMART is adamant about us not being self-employed since otherwise we couldn't be held to our service agreement--does anyone have a source on that? If indeed, SMART has created a nonexistent tax situation for us, then maybe that is why no one has gone into repayment (at least that is what I've seen people say on the forums). It would be extremely interesting to have a lawyer sit down and look at the agreement SMART has created with us--crowdfunding project?

Please, if you spoke with a CPA please give specific details about your conversation including the specifics of what you did and why you did it so that we can figure this out. Thanks!

Taxes

Re: CPA tax summary

Post by Taxes »

My CPA filed my taxes reporting the income as in box 7. But he just marked it as other income and I didn’t have to pay self employment tax.

Guest

Re: CPA tax summary

Post by Guest »

Taxes wrote:My CPA filed my taxes reporting the income as in box 7. But he just marked it as other income and I didn’t have to pay self employment tax.
This.

Self-employment tax is only when you earn money in return for goods or services. Since smart students are completely devoid of worthwhile contribution to society, others, or the economy, during school, it isn't earned and is more of just some money people give you for being alive. Kind of like winning a sweepstakes or the lottery.

gg151

Re: CPA tax summary

Post by gg151 »

How much are you expecting to pay in taxes? I've seen another forum saying that out of about $14,000 they are paying between $1,500-$1,700.

taxes

Re: CPA tax summary

Post by taxes »

I paid $1650 in taxes on the $17950 from SMART.

hello_tehehe

Re: CPA tax summary

Post by hello_tehehe »

I paid $1200 for state and federal. But this is including my return for filing jointly from my wife's job and my graduate stipend from January-July.

Guest0101

Re: CPA tax summary

Post by Guest0101 »

I paid $3501 on $47,200.

Taxessss

Re: CPA tax summary

Post by Taxessss »

So did everyone vary between filling in box 3 and 7?

taxThatAsset

Re: CPA tax summary

Post by taxThatAsset »

I recommend working with an accountant that provides some sort of insurance in case they make a mistake when preparing your taxes. For years I've been working with a CPA that works with H&R Block, she's very good. However, the first time she had to include SMART Scholarship funding for me, having never seen anything like it, she made some error (don't recall what it was) according to the IRS and I owed and additional $1000-ish. Due to the H&R Block guarantee, they/she had to pay the difference.

Post Reply