by YeahNo » Sun Jul 23, 2017 12:41 pm
taxes wrote:Looking through some of the older threads, other SMART scholars have assured that we are not considered self-employed. The stipends are considered scholarship income, which is different from self-employed income. It saves quite a bit in taxes.
Exactly. There is nothing to get "caught" for as the other poster suggests, as it is the correct way to report the stipend income. In 2015, SMART issued a tax memo that states the following: "You are considered an independent contractor, and not self-employed, and are not employed by either the United States Government or ASEE."
If you mark the income as self-employed you are portraying it as wages or funding in exchange for work, which it is not. This has also been explicitly stated by SMART as well. This is an important distinction because it excludes us from certain tax benefits, like contributing to an IRA, etc. (So if you lie and say you are self-employed, and then contribute to an IRA, there is a chance the IRS could fine you). Marking it as Other Income, still taxes it, just not with the self-employment taxes that don't apply in our case.
Like I said before, I am not a tax expert, but as I understand it, the most honest way to report the income is as other income. Turbotax just defaults it to self-employed because for 99% of other cases that is what it would be.
[quote="taxes"]Looking through some of the older threads, other SMART scholars have assured that we are not considered self-employed. The stipends are considered scholarship income, which is different from self-employed income. It saves quite a bit in taxes.[/quote]
Exactly. There is nothing to get "caught" for as the other poster suggests, as it is the correct way to report the stipend income. In 2015, SMART issued a tax memo that states the following: "You are considered an independent contractor, and not self-employed, and are not employed by either the United States Government or ASEE."
If you mark the income as self-employed you are portraying it as wages or funding in exchange for work, which it is not. This has also been explicitly stated by SMART as well. This is an important distinction because it excludes us from certain tax benefits, like contributing to an IRA, etc. (So if you lie and say you are self-employed, and then contribute to an IRA, there is a chance the IRS could fine you). Marking it as Other Income, still taxes it, just not with the self-employment taxes that don't apply in our case.
Like I said before, I am not a tax expert, but as I understand it, the most honest way to report the income is as other income. Turbotax just defaults it to self-employed because for 99% of other cases that is what it would be.