Student Stipend 1099-MISC for Roth IRA
I am a student in a non-compensatory role who receives a stipend categorized under a 1099-MISC every year. When I put it into the software, it notes that I have an excess Roth IRA contribution this year due to the 1099-MISC not counting as "earned income". Is that correct? A few sources online I've seen note that since 2019, 1099 income is treated as taxable income (Solved: Graduate Student Stipend for Roth). Is my understanding incorrect, or is this something I need to correct in the software?
Answers
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Hello vyw2,
Yes, you are correct about the stipend needing to be reported as taxable earned income to qualify for a Roth IRA contribution. I reviewed the software and entering it this way will work.
In the software, select Income > Other Income > scroll down to: Taxable Scholarships or Grants.
When it asks, "Did you receive a scholarship or grant that was NOT used to pay for tuition, books, or other qualified education expenses?" Select "Yes," and enter the income here.
On the second question that asks, "Are any of your scholarship or fellowship grants entered above from graduate or postdoctoral fellowship or stipend payments?" Enter "Yes." If you had federal taxes withheld, enter those as well as the EIN number on your form. Click Save and Continue at the bottom.
The following screen will ask: Taxable Graduate Student Stipends
"Enter how much in scholarship or fellowship grants that are related to graduate or postdoctoral fellowship or stipend payments:"Entering the taxable amount here will then enter the income as earned income on form Schedule 1, line 8r, which will allow you to contribute to a Roth IRA or Traditional IRA.
You may also want to review your entries on the IRA Contributions page.
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Thank you!
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