The Unofficial SMART Scholarship Forum

I've been studying this forum for the tax implications of the SMART scholarship including the possible kiddie tax. It looks like there is a new 1099-MISC starting in 2020 that has the normal "box 3." Anything that used to be reported in "box 7" is now on a different form, the 1099-NEC.

1) For 2020, did you receive a 1099-MISC or 1099-NEC?

2) If you received the "weekly internship support payment" ($1k/week during internship), was this also included on your 1099 (MISC or NEC)? Or did you receive a W-2 for that?

All 1099-MISC. Definitely never a W-2, they make it very clear you are not being compensated for services rendered. The exact type of income is non-compensatory. It should appear on a 1099-MISC and is not subject to self-employment tax. Yes, the ISPs should appear in the same group as all other SMART income.

Thank you for the reply.

Can you tell me where, "they make it very clear you are not being compensated for services rendered??"

Thanks again

Can you tell me where, "they make it very clear you are not being compensated for services rendered??"

By implication in handbook section 5.4.7(g) [not an employee of the federal government]: "Such scholars who are not otherwise employed by the Federal Government shall not be considered Federal employees for any other purpose."

And in emails [not employed by US Govt or LMI]: "Please note you are considered an independent contractor, and not self-employed, and were not employed by the United States Government, LMI, nor Scholarship America for the receipt of the payments listed on your Form 1099-MISC."

On the other thread, I mentioned SMART often uses language in-conflict with IRS language. This is yet another case. IMO, the term "contractors" in and of itself implies that compensation is for services received but they immediately go on to say it's not subject to self-employment tax.

Again, my ultimate advice is that scholars simply file their paperwork EXACTLY as it appears and confirm that they aren't paying self-employment tax by calculating an estimate of their income tax liability.