SMART Tax Status

General Discussion for SMART Scholarship Recipients

SMART Tax Status

Postby RF_EE » Sun Nov 24, 2013 5:39 pm

All recipients:

SMART has posted a memo on the award page regarding taxes and our income. The contents are below:

You are advised of the following:
ASEE must report all stipend, internship support, health insurance and book allowance payments made to Recruitment Participants under the SMART Scholarship Program. At year end, ASEE will provide participants and the Internal Revenue Service (IRS) with the informational Form 1099-MISC recording the amount paid to the participant during the tax year. ASEE does not withhold taxes from participant payments. Under current laws and regulations, participants are responsible for submitting quarterly estimates of income taxes to the IRS and paying the amounts due. Participants may have a similar liability with respect to state and/or local taxes depending upon the state and/or locality where the participant resides.

You are considered an independent contractor, and not self-employed, and are not employed by either the United States Government or ASEE. If you have further tax questions, please contact the IRS, as ASEE is prohibited from giving tax advice.
RF_EE
 
Posts: 24
Joined: Sun Aug 04, 2013 10:09 pm

Re: SMART Tax Status

Postby Longhorn » Mon Nov 25, 2013 11:03 am

It's been up there a little bit. When I saw it the first time I looked up the IRS definition of "independent contractor" and "self-employed". The irony? The IRS says the two titles are synonymous. Thanks SMART, real helpful.
Longhorn
 

Re: SMART Tax Status

Postby Guest » Mon Nov 25, 2013 5:52 pm

You shouldn't pay the self-employment tax unless you have a clever CPA who wants to you to deduct living expenses from the ISP. This has been discussed to the nth degree on this forum.
Guest
 

Re: SMART Tax Status

Postby IRSpains » Mon Nov 25, 2013 7:37 pm

Guest wrote:You shouldn't pay the self-employment tax unless you have a clever CPA who wants to you to deduct living expenses from the ISP. This has been discussed to the nth degree on this forum.


I did this and it did attract attention from the IRS. My CPA deducted per diem rate for every day I was there instead of itemizing. The IRS called me and essentially said I must be secretly working on the side given my income. The phone call ended up in a yelling match with an IRS lawyer who insisted that the SMART program sounded too over the top to even exist and I must be lying. I ended up winning the fight with the IRS somehow and deducted about $16,000 between two internships. It saved me a ton of money, but was a HUGE pain to deal with and ended up costing me a few hundred in CPA expenses.

But your right. Try this and you'll probably get flagged.
IRSpains
 

Re: SMART Tax Status

Postby Guest » Tue Nov 26, 2013 9:57 am

Yes I agree. My point was more that we don't have to pay the self-employment tax.
Guest
 


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