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Stipend and taxes

DebrunsDebruns Posts: 2,718Registered User Senior Member
Hi, My daughter who is a rising senior in college did a summer internship with Columbia for Public Health. She worked, had informal classes, lectures and trips. They paid her about 3800 for food and expenses. She didn't fill out any tax papers and no taxes were taken out of checks.
She is abroad but has been writing them because we never received any forms. They just sent her a link saying:
Stipends are considered taxable income to students. However, based on IRS rules, the University does not withhold tax on stipends or provide students with tax Form 1099. Students are responsible for reporting taxable stipend payments along with any other payments they receive and remitting any tax due with their personal income tax return.

We don't know how to enter this without a form, we don't have ID numbers etc. We are also in CT and she was in NY so state tax should apply. I was going to call the IRS but working and the hold times were too much today.

Anyone have something similar that could help?
Post edited by Debruns on

Replies to: Stipend and taxes

  • OperaDadOperaDad Posts: 2,474Registered User Senior Member
    If a tree falls in the forest .... If nothing is reported, then there is no way for the IRS to find out.

    Report it as Schedule C income. They seem to consider her an independent contractor, not an employee. Deduct all her expenses to earn the income, and pay taxes on the balance.

    Note: If 3,800 gross is all she made for the year, she may only owe self employment tax, and not income tax.

    BTW: Stipend income is supposed to be reported on w-2 or 1098-T. Maybe because she is not a student there that they won't give her a 1098-T. Something is really wrong about what they are doing.
  • mathmomvtmathmomvt Posts: 4,131Registered User Senior Member
    I agree, it doesn't sound right to me. I don't think it's right for her to have to report it as self-employment income (1099) and pay self-employment tax (basically social security tax) on it.

    Assuming that she does not really count as self-employed, someone with only 3800 in income does not need to file a federal tax return.

    Since they say "based on IRS rules, the University does not withhold tax on stipends or provide students with tax Form 1099" maybe she could ask them what rules they are referring to.
  • DebrunsDebruns Posts: 2,718Registered User Senior Member
    Yes, she made about 1000 more working at her college and has a W2 for that. I was concerned and being away, she sent emails, and just got that response. I wrote her this morning to double-check if that really was all they sent her, the link, but I think it is.
    She told me if there is no form, how can I fill in all the boxes on T.Tax or other tax form?
    Some of it was used for expenses, they gave them a room but they had to pay for food, bedding, etc. .I thought after I did my taxes, helping her would be a breeze.
    She did get a 1099Misc 2 years ago when she worked at her school helping a Masters student with a project in the summer. It was grant money and she ended up paying a small amount but it was more cut and dry.
    I called TTax and their tax professional was stumped too.
    I bet not sending out forms, most doesn't get reported.
  • 3bm1033bm103 Posts: 3,557Registered User Senior Member
    Report it as Schedule C income
    No. Don't do that. Report it as a stipend, grant or scholarship on line 7 of the student's return. And yes, a LOT of colleges do that. My kids have received those from many places. Sometimes they put it on a W-2, especially if they have to do something for it like yours do. Sometimes they put it on a 1099 and sometimes they don't report it at all. Doesn't mean you shouldn't
  • DebrunsDebruns Posts: 2,718Registered User Senior Member
    I'm on hold with the IRS with the third person...no one knows. I read that there is an ID number so if you don't get a 1099 mIsc, you shouldn't ignore it, but this IRS worker said you can't report what you don't have. They didn't even give their IRS codes.
  • mathmomvtmathmomvt Posts: 4,131Registered User Senior Member
    Report it as a stipend, grant or scholarship on line 7 of the student's return.

    That makes more sense.

    You don't need their tax ID to report income. Just follow the instructions for 1040 that apply to scholarships (I think you write "scholarship" or "stipend" and the amount on the line next to the entry for line 7 and then include it in the total.)
  • DebrunsDebruns Posts: 2,718Registered User Senior Member
    Well, after 45 minutes with IRS office, not definitive answer. I went from the first person (who I swear seemed to insinuate I forget about it) to someone in "Income" then "Business". I had to go to work so I said we'd continue later. I guess I don't feel so dumb when the IRS office is perplexed.
    She didn't work like a normal internship, 30-40 hours for a company, it was a mix of working for public health venues that said they could mentor, classes, trips, etc. One person said it was a shame money used to support herself had to be taxed fully, but she didn't know what she could write off. She said Columbia should have at least said what form to use, it seemed "irregular" to them since the internship wasn't the norm.
    Well, I might walk in our local IRS office with info and just have her do something after that, she has to have it done in a month.
    Thanks for the feedback.
  • OperaDadOperaDad Posts: 2,474Registered User Senior Member
    Well, after 45 minutes with IRS office, not definitive answer.

    Note: They are not tax experts, and I think relying upon information from them is not an excuse when you are audited.
    She told me if there is no form, how can I fill in all the boxes on T.Tax or other tax form?
    Do your taxes as normal and report the amount of the stipend check as "additional unreported income" when you do your taxes.
    https://docs.astro.columbia.edu/wiki/Wisdom/Misc/Taxes?format=txt

    Technically a stipend is any lump sum of money given for a specific purpose (an allowance).

    In the temporary staffing industry the term is often used as an amount of money given for housing expenses and its use is usually interchanged with the term per diem. The main thing to realize is that you need to clarify what the stipend is for.

    The determination of whether or not it is taxable is based on the How and Whys involved. If given as a housing reimbursement, it is only tax free if the person qualifies by and having a tax home.
    FAQ Traveling Tax Issues

    The reason I mention Schedule C (vs reporting it on line 7) is whether you have enough "expenses" (travel, food, lodging, etc.). Schedule C is were you can do the deductions. Hard to do for Line 7. You may be able to offset Education expenses (tuition from the college she currently attends, kind of like a scholarship she can use anywhere). Get the Schedule C income under $600 (I think), and no self employment tax is due.
  • 3bm1033bm103 Posts: 3,557Registered User Senior Member
    That amount would be $400.

    Also, the amount on line 7 is considered earned income for the purposes of the standard deduction. So..........for $4000 of income on line 7 the student would owe no tax. On schedule C, they would owe no tax, but about $600 in self employment tax.

    On line 21, it would be considered unearned and any amount over the standard deduction would be taxed.
  • DebrunsDebruns Posts: 2,718Registered User Senior Member
    I see, (I think) She did have to buy food but one of the "experts" said food wasn't really a deduction and commuting to work within a certain number of miles, not either.
    They were confused, because she wasn't an employee or student of Columbia, just doing a program through them. The place she worked didn't pay her, a stipend from the CDC did to my recollection. They just allowed the students to work there as part of the program.
    I think what confused the last person I spoke with, was that it was a smorgasbord of things.

    I realize they aren't CPA's, but if they gave me bad advice and I had their ID number and name, I feel they should give you some leeway. If you can't get direct information from an IRS worker (and I had 3) that is sad. : /

    I will look at the links given now. Thanks
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