Tax reporting 1099 duplicate but from different entities

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bogleviewer
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Tax reporting 1099 duplicate but from different entities

Post by bogleviewer » Sat Mar 03, 2012 3:45 pm

Wonderful Saturday working on some tax stuff before getting it over the CPA.

I came across a 1098-T and 1099-MISC that had the same dollar amount so I pulled them and entered them into H&R Block at Home one after the other.

One was a 1099-MISC from some company in Washington DC for my wife. Didnt recognize the name but she definitely has her SSN and address. It was a 1099-MISC income document showing roughly $3,000

The other was a 1098-T for the same $3,000 dollar amount as the above MISC but the 1099-T was from a University my wife attended listed as SCHOLARSHIP.

I watched the "what you owe/refund" dollar amount in H&R block software and when I put one in it adjusted negatively for us (saying we are paying more taxes) and then when I put the other one in the adjustment happened negatively AGAIN for us (saying we again owe more than before).

So both the 1098-T and 1099-MISC is for the same activity, however, they were reported from separate entities both directed to my wife.

So rather than reporting $3000 worth of extra type income, if we report both on our 1040 then it will be $6000 worth of extra type income.

What do you do? Can you somehow write a letter of explaination to the IRS? Do you write a letter to the issuers?


EDIT: Indeed it is a 1098-T and 1099-MISC. My wife does NOT work for the University but was a student.
Last edited by bogleviewer on Sat Mar 03, 2012 5:55 pm, edited 1 time in total.

Sidney
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Re: Tax reporting 1099 duplicate but from different entitie

Post by Sidney » Sat Mar 03, 2012 3:51 pm

are you sure it isn't a 1098-T?
I always wanted to be a procrastinator.

sscritic
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Re: Tax reporting 1099 duplicate but from different entitie

Post by sscritic » Sat Mar 03, 2012 3:55 pm

Some facts might help.

Did your wife have a scholarship?
Did she work at the University?
Was working a condition of the "scholarship," e.g., was she actually a teaching assistant and not on a scholarship?
Was she half TA and half scholarship for a total of $6000?
What actually happened at the University? This is what is going to govern what you put on the return, not what a slip of paper says.

sscritic
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Re: Tax reporting 1099 duplicate but from different entitie

Post by sscritic » Sat Mar 03, 2012 4:48 pm

Note that the box the number appears in makes a difference as well.
For the 1098-T
Box 5. Shows the total of all scholarships or grants administered and processed by the
eligible educational institution. The amount of scholarships or grants for the calendar year
(including those not reported by the institution) may reduce the amount of the education
credit you claim for the year.
Note that this doesn't say anything about the amount being taxable, but says that if you paid $7000 of tuition but $3000 was paid by scholarship, you only spent $4000 yourself, and you can't claim an educational credit based on money you never spent.

jebmke
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Re: Tax reporting 1099 duplicate but from different entitie

Post by jebmke » Sat Mar 03, 2012 4:57 pm

Tax software is dangerous in the wrong hands.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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damjam
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Re: Tax reporting 1099 duplicate but from different entitie

Post by damjam » Sat Mar 03, 2012 5:12 pm

jebmke wrote:Tax software is dangerous in the wrong hands.
If by the "wrong hands" you mean anyone not familiar with the relevant portions of the tax code, I think 90 percent of users of tax software are the "wrong hands."

sscritic
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Re: Tax reporting 1099 duplicate but from different entitie

Post by sscritic » Sat Mar 03, 2012 5:16 pm

damjam wrote: If by the "wrong hands" you mean anyone not familiar with the relevant portions of the tax code, I think 90 percent of users of tax software are the "wrong hands."
You don't have to be familiar with tax code, you just have to be willing to read. Do you think 90% of the users of tax software can't read or just that 90% of users of tax software are unwilling to read? My bet is on the latter.

jebmke
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Re: Tax reporting 1099 duplicate but from different entitie

Post by jebmke » Sat Mar 03, 2012 5:24 pm

sscritic wrote:
damjam wrote: If by the "wrong hands" you mean anyone not familiar with the relevant portions of the tax code, I think 90 percent of users of tax software are the "wrong hands."
You don't have to be familiar with tax code, you just have to be willing to read. Do you think 90% of the users of tax software can't read or just that 90% of users of tax software are unwilling to read? My bet is on the latter.
I agree. You don't need to be familiar with the code. But you should be familiar with sections that affect you regularly and be able to research sections that come up ad-hoc. By sections, I really mean the basic docs that the IRS provides -- not the code itself.

For many people, taxes are the top or near the top of their expenses. I always scratch my head when people will spend (literally) hours researching something like a cell phone contract or a flat-screen TV, but when it comes to their taxes, just key data into a program, mindlessly answering questions they don't understand, and hope for the best.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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damjam
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Re: Tax reporting 1099 duplicate but from different entitie

Post by damjam » Sat Mar 03, 2012 5:28 pm

sscritic wrote:
damjam wrote: If by the "wrong hands" you mean anyone not familiar with the relevant portions of the tax code, I think 90 percent of users of tax software are the "wrong hands."
You don't have to be familiar with tax code, you just have to be willing to read. Do you think 90% of the users of tax software can't read or just that 90% of users of tax software are unwilling to read? My bet is on the latter.
Agreed. But to be fair to the average user of tax software, the producers of that software work hard to make people think that using their product will make filling your taxes easy. Once you get the software the product lulls them into a false sense of security. Turbo Tax, for example, goes through a few screens where they "check your return for errors" and "guarantee you have received the largest refund due." What they don't say is if you entered something wrong all bets are off, or worse if the program has a bug all bets are off.

To the OP I hope you figure out your situation, and sorry to hijack your thread.

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HueyLD
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Re: Tax reporting 1099 duplicate but from different entitie

Post by HueyLD » Sat Mar 03, 2012 5:35 pm

jebmke wrote:You don't need to be familiar with the code. But you should be familiar with sections that affect you regularly and be able to research sections that come up ad-hoc. By sections, I really mean the basic docs that the IRS provides -- not the code itself.

For many people, taxes are the top or near the top of their expenses. I always scratch my head when people will spend (literally) hours researching something like a cell phone contract or a flat-screen TV, but when it comes to their taxes, just key data into a program, mindlessly answering questions they don't understand, and hope for the best.
+1. Sad but true.

The retail tax software is great for those who are willing to at least learn basic tax knowledge. But some people read only what they want to read and hear only what they want to hear. And some are more than willing to commit tax fraud by blaming mistakes made by tax software. I had an interesting discussion with someone recently and he stated that he would just do his own taxes on TT so that he could do what he wanted without having to abide by anything IRS says.

bogleviewer
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Re: Tax reporting 1099 duplicate but from different entitie

Post by bogleviewer » Sat Mar 03, 2012 5:57 pm

sscritic wrote:Some facts might help.

Did your wife have a scholarship?
Did she work at the University?
Was working a condition of the "scholarship," e.g., was she actually a teaching assistant and not on a scholarship?
Was she half TA and half scholarship for a total of $6000?
What actually happened at the University? This is what is going to govern what you put on the return, not what a slip of paper says.
She got a scholarship for the dollar amount stated on the 1098-T (and 1099-MISC). The scholarship was if she taught in a "high needs" school after graduation of which she did.
My wife does NOT work for the University but was a student.
She didnt work for the university nor get a pay stub from the university. She got a grant to teach at a "high needs" school after graduation at a local school district. That is what she did.


On a side note, I only put this stuff into retail tax software to get an idea of what to expect from the CPA. I send what I did (on paper print off 1040) as well as all requested documents like 1099's, 1098's, w2, k1s, etc). My CPA then does it in his software (whatever it is) and then gives me my final copy to file.

So this is more of a question for myself on how it works rather than trying to get it done perfectly as my CPA will be able to get it done right.

sscritic
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Re: Tax reporting 1099 duplicate but from different entitie

Post by sscritic » Sat Mar 03, 2012 6:10 pm

OK.

So where did you enter the two amounts in TT? When you are at the screen, click on open form or whole form or the equivalent so you can tell us what form and what line you put the amounts.

Also, you might want to tell us what question TT was asking in the Q&A screen when you entered the amounts.

Part of the problem may be that this was a "conditional" scholarship. From what you describe, she got to keep the money if she performed the service; if she didn't perform the service, she wouldn't have been able to keep the scholarship. Is that correct?

It is good that you are trying to learn. Here is what the IRS says about scholarships:
If you received a scholarship or fellowship, all or part of it may be taxable, even if you did not receive a Form W-2. Generally, the entire amount is taxable if you are not a candidate for a degree.

If you are a candidate for a degree, you generally can exclude from income that part of the grant used for:

Tuition and fees required for enrollment or attendance, or
Fees, books, supplies, and equipment required for your courses.
You cannot exclude from income any part of the grant used for other purposes, such as room and board.

A scholarship generally is an amount paid for the benefit of a student at an educational institution to aid in the pursuit of studies. The student may be in either a graduate or an undergraduate program.
...
Payment for Services
All payments you receive for past, present, or future services must be included in income. This is true even if the services are a condition of receiving the grant or are required of all candidates for the degree.

Example
Gary Thomas receives a scholarship of $2,500 for the spring semester. As a condition of receiving the scholarship, he must serve as a part-time teaching assistant. Of the $2,500 scholarship, $1,000 represents payment for his services. Gary is a degree candidate, and his tuition is $1,600. He can exclude $1,500 from income as a qualified scholarship. The remaining $1,000, representing payment for his services, is taxable.

Fulbright Students and Researchers
A Fulbright grant is generally treated as any other scholarship or fellowship in figuring how much of the grant can be excluded. If you receive a Fulbright grant for lecturing or teaching, it is payment for services and subject to tax.
...
Additional information
See Publication 970, Tax Benefits for Education, for more information on how much of your scholarship or fellowship is taxable.
http://www.irs.gov/individuals/students ... 74,00.html

This sounds like it would be taxable as the future service was a condition of the scholarship, but it should be taxable only once, not twice.

sscritic
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Re: Tax reporting 1099 duplicate but from different entitie

Post by sscritic » Sat Mar 03, 2012 6:18 pm

More from pub 970:
Payment for services. Generally, you must include in income the part of any scholarship, fellowship, or tuition reduction that represents payment for past, present, or future teaching, research, or other services. This applies even if all candidates for a degree must perform the services to receive the degree. (See below for exceptions.)

Exceptions. You do not have to include in income the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under:
• The National Health Service Corps Scholarship Program, or
• The Armed Forces Health Professions Scholarship and Financial Assistance Program,
and you:
• Are a candidate for a degree at an eligible educational institution, and
• Use that part of the scholarship or fellowship to pay qualified education expenses.
...
Example 2. You are a candidate for a degree at a medical school. You receive a scholarship (not under either of the exceptions mentioned above) for your medical education and training. The terms of your scholarship require you to perform future services. A substantial penalty applies if you do not comply. The entire amount of your grant is taxable as payment for services in the year it is received.
It doesn't sound like she is an exception (unless her teaching was a condition of getting a National Health Service Corps Scholarship), so she would be like example 2.

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