How to report housing stipend in tax return?

[zrzhu111]

I got 1099 Misc form from my employer for the housing stipend. How should I report this income? Anyone has experience on it? Thanks.

3/9 update:

The residency program is sponsored by "A" hopistal at "B" hospital location. My friend works at "B" hospital most of the time. He received paycheck paid by "A" hospital and received W2 at the end of year. In addtiona, she received a monthly check of housing stipend from "B" hopsital and receives 1099 Misc with the amount in box 7. How can he report the housing stipend in 1099 Misc? Does he need to pay self employment tax via schedule C? or he only needs to pay social security and medicare tax via form 8919?

[jfoxcpacfp]

zrzhu111 wrote:

I got 1099 Misc form from my employer for the housing stipend. How should I report this income? Anyone has experience on it? Thanks.

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While I am not familiar with your specific situation, in general, it appears based on the limited information given that you should report it on a schedule C offset by the actual cost of the housing that it reimburses. That may yield a profit or a loss. It would have been better to have negotiated for an "accountable plan" (imo) whereas you submitted an actual expense report which was reimbursed by your employer. Of course, if the housing stipend is far greater than your actual expenses, you are coming out ahead and good for you!

[zrzhu111]

I made some update to my original post. Let me know if you have any additional thoughts. Thanks.

[jfoxcpacfp]

zrzhu111 wrote:

I got 1099 Misc form from my employer for the housing stipend. How should I report this income? Anyone has experience on it? Thanks.

3/9 update:

The residency program is sponsored by “A” hopistal at “B” hospital location. My friend works at “B” hospital most of the time. He received paycheck paid by “A” hospital and received W2 at the end of year. In addtiona, she received a monthly check of housing stipend from “B” hopsital and receives 1099 Misc with the amount in box 7. How can he report the housing stipend in 1099 Misc? Does he need to pay self employment tax via schedule C? or he only needs to pay social security and medicare tax via form 8919?

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LOL, that would be interesting. Form 8919 is a "whistleblower" form and I really don't recommend you file it unless your current employer is your soon-to-be former employer. The purpose of Form 8919 is to report an employer who s/h/b reporting you as an employee and paying FICA taxes on you but is being a cheapskate and skirting the law. Doubt you want to go there. Besides, you can offset the income with expenses. Without knowing more (as in, being your preparer), I'd say just follow my initial recommendation.

[zrzhu111]

What kind of expense can he deduct since he goes to Hospital B every day?

[jfoxcpacfp]

The housing costs that the stipend is intended to reimburse.

[zrzhu111]

jfoxcpacfp wrote:

The housing costs that the stipend is intended to reimburse.

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sorry, I don't understand what you say here. Do you mean he cannot deduct any expenses?

[jfoxcpacfp]

zrzhu111 wrote:

jfoxcpacfp wrote:

The housing costs that the stipend is intended to reimburse.

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sorry, I don’t understand what you say here. Do you mean he cannot deduct any expenses?

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I'm afraid i have lost the thread of the conversation. My understanding is, basically, that you have a friend who received a 1099 for a housing stipend. Your friend must report the income but can offset it with the housing costs as an expense. Beyond that, I don't know.

[DMFA]

File Schedule C for 1099-Misc "self-employed" income.

Input the amount of housing stipend received as income.

Include everything you spent on housing (rent, utilities, etc) as expenses.

You'll be responsible for income tax and both employer/employee portions of MCR/SS tax on the difference between the two (which could be zero or less).  Here's a theoretical situation for you:

• Say housing stipend is $20,000


• If your rent is $1,400/month and utilities are $200/month = $1,600/month


• Total annual expenses: $19,200/yr (you can add any home-related expenses to this to minimize taxable amt)


• Net "profit:" $20,000 - $19,200 = $800 of taxable "self-employed" income


• Income tax at marginal rate (prob 15%): $120


• You'd owe employer and employee shares of MCR/SS (7.65% x 2  = 15.3%): $122.40


• Total tax owed on those: $242.40

Where people run into trouble is forgetting to deduct what they actually spent on housing as "expenses."

Clear as mud?

[zrzhu111]

Thanks.

[zrzhu111]

DMFA wrote:

File Schedule C for 1099-Misc “self-employed” income.

Input the amount of housing stipend received as income.

Include everything you spent on housing (rent, utilities, etc) as expenses.

You’ll be responsible for income tax and both employer/employee portions of MCR/SS tax on the difference between the two (which could be zero or less).  Here’s a theoretical situation for you:

• Say housing stipend is $20,000


• If your rent is $1,400/month and utilities are $200/month = $1,600/month


• Total annual expenses: $19,200/yr (you can add any home-related expenses to this to minimize taxable amt)


• Net “profit:” $20,000 – $19,200 = $800 of taxable “self-employed” income


• Income tax at marginal rate (prob 15%): $120


• You’d owe employer and employee shares of MCR/SS (7.65% x 2  = 15.3%): $122.40


• Total tax owed on those: $242.40

Where people run into trouble is forgetting to deduct what they actually spent on housing as “expenses.”

Clear as mud?

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Thanks. It's really clear to me. Any information on the IRS website i can reference to if unfortunately he get audited? If this is the right way, I probably would recommend my friend to amend his last 2 years return. He didn't deduct the rent as "expense", so he paid quite a lot on taxes.