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February 23, 2022
Question

I received a 1099-NEC from my employer for a $2500 scholarship. How do I report this on my tax return?

  • February 23, 2022
  • 1 reply
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This is not self-employment income and I'm not sure which option to choose for my situation.

1 reply

February 23, 2022

The scholarship money you received may likely be taxable; however, there are situations where scholarships of the type you received would not be taxable income.  Company scholarship programs are usually administered by company-created private foundations.  Scholarship grants awarded by these private foundations are taxable expenditures unless the grant programs meet the requirements for individual grants and receive advance approval from the IRS.  Grants to individuals for travel, study, or other similar purposes (including loans made for charitable purposes, and program-related investments) are taxable expenditures, unless the following conditions are met:

  1. The grant is awarded on an objective and nondiscriminatory basis under a procedure approved in advance by the Service, and
     
  2. It is shown to the satisfaction of the Service that the following requirement is met--

    a. The grant is a scholarship or fellowship and is to be used for study at an educational institution that normally maintains a regular faculty and curriculum and normally has a regularly organized body of students in attendance at the place where the educational activities are carried on. For these purposes, grant recipients need not be limited to degree candidates, nor must the grant be limited to tuition, fees, and course-required books, supplies and equipment. A recipient may use grant funds for room, board, travel, research, clerical help or equipment, that are incidental to the purposes of the scholarship or fellowship grant.

           b. The grant's purpose is to achieve a specific objective, produce a report or similar product, or improve or enhance a                   literary, artistic, musical, scientific, teaching, or similar capacity, skill or talent of the grantee.

 

There were other conditions than the two listed above, but the two listed above appeared closest to your situation.  

 

Assuming this scholarship is taxable income, but not as you say self-employment income (you should request your employer provide you with a 1099-Misc), then you can report it as "other income."  

 

To enter other income in TurboTax online, click on Wages & Income, scroll down the page to Less common income, click on the drop-down arrow and select Miscellaneous Income.  From the list select Other reportable income and respond to the questions on the pages that follow.  If you see a page that asks "was this activity done to earn income/profit," or a similar question, you will need to answer "no" as a "yes" answer will direct you to completing a Schedule C which you are trying to avoid. 

 

@weebabybunny

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