I’m helping my daughter with her taxes, and I’ve never encountered this before.
My daughter is a graduate student at University A. University B offers a workshop during the summer and $1000 toward travel expenses. She applied and was selected from dozens of applicants to go, and spent a little more than $1000 on travel. University B sent her a 1099-Misc, with $1000 in Box 3 for prizes, awards, and other income.
Is this a prize, award, or scholarship?
Can she write off the money she spent on travel, since she was required to do so (University A didn’t require that she go to the workshop, but University B required her to buy her own plane ticket & ground trans.)?
DISCLAIMER: I am not a cpa…but I pay as little taxes as possible.
It sounds like this was a self-employment gig…so I would definitely think she could itemize her income and expenses on Schedule C for this engagement. The 1099 is the income and she can net out her actual expenses (don’t forget mileage).
NancyM, I don’t know what University B called it. It was intended to offset travel expenses, not pay her a salary while she’s there (she’s a student at the workshop; if she were teaching there, that would be different). She does get a stipend at University A, and that is taxable, but I think that’s during the academic year only.
When you were doing workshops with the stipend, where on Form 1040 did you write off the travel expenses, or did you do Schedule C?
Butler, I thought about Schedule C. The workshop was to further her education, not earn money, so I don’t want to call it self-employment. I don’t really want to call it a prize or award either because she couldn’t get the $1000 if she didn’t spend the money on airfare. Maybe it is a stipend, and she should do Sched. C.?
@lisa5678 they issued her a 1099-MISC which is income in the eyes of the IRS. You can call it whatever you want (prize, award, stipend…). You should net out the expenses incurred against the income to reduce the tax liability.
My son bartends part-time in college and gets a 1099 from which he deducts the cost of his licenses, mileage, any accessories he buys, etc…
Lisa5678, The Form 1040 one-page simplified Schedule C-EZ is the additional form that your daughter needs to fill out, as long as the total business income is $5000 or less, and she meets all the following (which I think she does):
o Had no employees during the year.
o Are not required to file Form 4562,
Depreciation and Amortization, for
this business. See the instructions
for Schedule C, lline 13, on page
C-3 to find out if you must file.
o Do not deduct expenses for
business use of your home.
o Do not have prior year un-allowed
passive activity losses from this
business.
Yes, sorry about that. It has been many years since I filed a business Schedule. Anyway, in this case, only Gross Income minus Total Expenses = Reported Income, carried over to Form 1040, Schedule 1, line 3, Business income or (loss). Attach Schedule C) to your return package.
It finally sunk in WHY the IRS still has the old 2018 Schedule C-EZ still available to upload to your computer. It can be filled out and used as a model for people like Lisa5678’s daughter who are not running a business, but only have some business-type income and a few expenses to report. Get the old 2018 schedule C-EZ, fill out the bottom (data) part, transfer the numbers over to a new 2023 Schedule C, filling in only the boxes that you used on the C-EZ form. That way, you don’ have to try to figure out all the business-type jargon (depreciation, loan interest, cost of goods sold, and about 20 other types of expenses on the unneeded lines on Schedule C. Her only income on Schedule C will be $1000 on Line 1, carried down to Line 7, Gross Income. Expense will probably be only Travel, with a total amount for that listed on line 24a, carried down to Line 28, Total Expenses. Line 29 then subtracts Travel Expenses from Income, to find Profit (positive number) or Loss (negative number), and that carrried down to Line 31, Net Profit or (Loss). If there is a Loss, check box 32A, All investment is at risk. Carry the profit or loss to Schedule 1, line 3, using a negative number if a loss, which subtracts from any other numbers on Schedule 1, Part 1, Additional Income.