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Old 02-08-2013, 09:51 PM
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1099 Scholarship Help

My daughter is a college freshman who does not work. She received a scholarship last year from her high school in the amount of $1000. They put it on a 1099-Misc for as Other Income. I tried to get them to correct it to zero and send a 1098-T instead and they refuse. If she files on that $1000 alone she is paying in almost $200 in taxes. Is there anyway around them reporting it incorrectly??



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Old 02-09-2013, 04:19 AM
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“My daughter is a college freshman who does not work. She received a scholarship last year from her high school in the amount of $1000. They put it on a 1099-Misc for as Other Income. I tried to get them to correct it to zero and send a 1098-T instead and they refuse. “=====>They shouldnot use Form 1099-MISC to report scholarship or fellowship grants. Scholarship or fellowship grants that are taxable to the recipient because they are paid for teaching, research, or other services as a condition for receiving the grant are considered wages and must be reported on Form W-2.
“If she files on that $1000 alone she is paying in almost $200 in taxes.”=====>Correct; the income from the Form 1099-MISC on Box 3 has to be reported on Line #21 of Form as other income subject to her marginal tax rate.
Is there anyway around them reporting it incorrectly??”=====> The amount, $1K, needs to be shown in box 5 of the 1098-T.However,despite the 1099-MISC instructions saying the scholarships should not be reported this way, the school will not reissue. Then,you must request the payer to file a corrected 1099 Misc one more time. Asyou are the recipient of an erroneous 1099 Misc, you can ask the payer to file a corrected 1099 Misc. The payer must send a copy of the corrected 1099 Misc to you. Then, you must attach the corrected 1099 Misc to your tax return and mail your tax return as indicated in the instructions. If the payer refuses it, yo can attach a copy of the erroneous 1099 Misc with your tax return and an explanation. Instructions to the 1900 Misc indicate that the tax payer can attach a written explanation of the error in the 1099 Misc when filing the return. This is an option if you can not contact the payer or if the payer has not timely filed a corrected 1099 Misc. please contact the IRS for more info.



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