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:
https://smartscholarshipprod.service-no ... ca7c961968You are considered an independent contractor, and not self-employed, and are not employed by either the United States Government or Scholarship America.
(And we both agreed that statement makes no sense given that the IRS says
https://www.irs.gov/businesses/small-bu ... or-defined)If you are an independent contractor, you are self-employed.
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!