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Question
My school sent me a 1099-NEC for my stipend, what should I do?
AI accountant’s answer:
If your school sent you a 1099-NEC for your stipend, it means they consider the payment to be nonemployee compensation. In this situation, you would typically report the amount on Schedule C (or Schedule C-EZ) as self-employment income when filing your tax return. The income will be subject to self-employment taxes (Social Security and Medicare taxes) in addition to income tax. You can calculate your self-employment tax using Schedule SE. However, if you believe you received the 1099-NEC in error and that your stipend should be classified differently, you should reach out to the school's financial department for clarification and a possible correction.
Comment from reviewer
Ieva Ivanauskas, EA

The stipend is not subject to self-employment tax and should be reported as "Other income."

Not Correct.
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