Is this taxable income?

[green1237]

I have been receiving a monthly stipend since signing for a job mid 2017 to start after residency this coming summer. I have not received any tax documents for this income and no taxes have been withheld from the stipend checks.

Is this taxable income? Should I be expecting a W2? How do I report this income on my taxes?

[jfoxcpacfp]

There are different kinds of stipends - what is the purpose of yours? You won’t receive a W2 but that doesn’t mean it is not taxable. If you could provide additional information, I should be able to help.

[green1237]

Thank you. The contract refers to it as a "commencement stipend as an incentive to commence services on the commencement date and as an incentive to minimum two years employment commitment". It's a set amount paid out monthly until start of my employment. If I leave before two years I have to repay a prorated amount. Does that help?

[bd4727]

Would also be curious for answers. Looking at a few similar offers. One told me they pay the stipend as 1099so presumably taxed like any other 1099 work?

[shady]

Not sure if it helps, but my stipend was paid during residency and not taxed. When i started the job the money was forgiven at X rate over X paychecks. That amount showed up on each pay stub and was taxed at my now higher rate. The stipend is nice because you get some extra money during residency, but tax wise you lose out because when it is forgiven you pay a higher tax rate.

[Ghetto]

In my experience: if you have to ask, then the answer is yes, the income is taxable.

[jfoxcpacfp]

green1237 wrote:

Thank you. The contract refers to it as a “commencement stipend as an incentive to commence services on the commencement date and as an incentive to minimum two years employment commitment”. It’s a set amount paid out monthly until start of my employment. If I leave before two years I have to repay a prorated amount. Does that help?

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Yes, that would be taxable. However, you need to check with your employer to see if they are treating as a loan, per the way shady's is being treated. The fact that they will require repayment in the event you don't stick around for 2 years indicates that may be the case. You would not want to recognize it as income now and then get a 1099 later.

[boardscrusher]

Related question: My future employer is offering me a small monthly stipend (about $1500) before starting, will be paid as an independent contractor. The purpose of this stipend is to cover health insurance costs, however this purpose is not specified in the contract. I understand that this income is taxable. Can it be offset by the cost of health insurance if this purpose is not explicitly stated in the contract? Would I need to pay social security / medicare (employment taxes) on this income as I would for normal earned income, or should it be treated as unearned income?

[spiritrider]

The purpose of the stipend in not relevant.

If you are an independent contractor. You can take advantage of the self-employed health insurance deduction, provided you are not "eligible" to be covered under an employer subsidized health insurance plan of you or your spouse. If you can not do this, health insurance premiums are only itemised deductions to the extent they exceed 10% of your AGI.

Business profit * 92.35% would be subject to SE taxes. This will be considered self-employed earned income (business profit - 1/2 SE tax).

[childay]

boardscrusher wrote:

Related question: My future employer is offering me a small monthly stipend (about $1500) before starting, will be paid as an independent contractor. The purpose of this stipend is to cover health insurance costs, however this purpose is not specified in the contract. I understand that this income is taxable. Can it be offset by the cost of health insurance if this purpose is not explicitly stated in the contract? Would I need to pay social security / medicare (employment taxes) on this income as I would for normal earned income, or should it be treated as unearned income?

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Is your future employment contract also Independent contractor 1099?  Or is it an employed W2 position

[boardscrusher]

I will be w2 after the stipend period.