https://ttlc.intuit.com/questions/37849 ... o-i-put-it
This is the proper method (if using turbotax) for avoiding the self employment tax, after SMART decided to put this crap on a 1099 (which they shouldn't have, it a just them being lazy).
And dont worry, there should be no grey area here. SMART very clearly states that the stipend is not in exchange for any type of service and that we are not considered self employed. This is legit.
Read This Before Doinf Taxes
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chowder138
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Re: Read This Before Doinf Taxes
So to confirm, this means the stipend is **NOT** taxable? And if the stipend was my only income, then I shouldn't owe any taxes? It's so hard to keep this stuff straight.
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Guess Again
Re: Read This Before Doinf Taxes
Wrong! Stipend is taxable as a taxable scholarship (but not self-employment income.) Could be subject to the "Kiddie Tax". Lots of advice on this forum but not all of it is accurate. Refer back to IRS documents and get professional advice if you don't understand the regulations.chowder138 wrote:So to confirm, this means the stipend is **NOT** taxable? And if the stipend was my only income, then I shouldn't owe any taxes? It's so hard to keep this stuff straight.
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chowder138
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Re: Read This Before Doinf Taxes
I'm confused then, because the first page linked in this thread says to make an adjustment the total amount paid by SMART, but negative. Which makes it untaxed.Guess Again wrote:Wrong! Stipend is taxable as a taxable scholarship (but not self-employment income.) Could be subject to the "Kiddie Tax". Lots of advice on this forum but not all of it is accurate. Refer back to IRS documents and get professional advice if you don't understand the regulations.chowder138 wrote:So to confirm, this means the stipend is **NOT** taxable? And if the stipend was my only income, then I shouldn't owe any taxes? It's so hard to keep this stuff straight.
I'm thinking I'm going to go talk to a CPA and get professional advice on how exactly to file this.
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SmartParent
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Re: Read This Before Doinf Taxes
There are 3 steps.
1) Enter the 1099 income so the 1099 doesn't fail the IRS matching program, but since this is in box 3 it is reported as miscellaneous income and in the wrong place
2) Correct the "bad" entry by reentering as a negative miscellaneous income to remove the income from the total.
3) Enter the income as a taxable scholarship so it is treated correctly. (Scroll down to the section on REPORT STIPEND INCOME CORRECTLY" This is the important step that may be missed on a quick reading.
At least this year it is in box 3 so you don't have to create a fake business to do the same thing.
1) Enter the 1099 income so the 1099 doesn't fail the IRS matching program, but since this is in box 3 it is reported as miscellaneous income and in the wrong place
2) Correct the "bad" entry by reentering as a negative miscellaneous income to remove the income from the total.
3) Enter the income as a taxable scholarship so it is treated correctly. (Scroll down to the section on REPORT STIPEND INCOME CORRECTLY" This is the important step that may be missed on a quick reading.
At least this year it is in box 3 so you don't have to create a fake business to do the same thing.