How to report stipend income on 1099-NEC - Is it always self-employment income?

When income is reported on a 1099-NEC, the IRS generally expects it to be reported as self-employment income on Schedule C. However, there are exceptions for stipends in certain educational and research contexts. The key question is what this stipend was actually for. If it was truly a reimbursement for specific business expenses you incurred, you might be able to report the income on Schedule C but then deduct those same expenses, resulting in no net taxable income for that portion. If it was a qualified scholarship or fellowship that went toward educational expenses, it might be reported differently. Your best approach is to first contact the university's accounting department to clarify why they issued a 1099-NEC for a stipend. Ask if they would consider reissuing it as a different form if appropriate. If they won't change it, you'll likely need to report it on Schedule C, but then deduct the legitimate expenses it was meant to cover.

I ran into almost the exact same situation last year with a research grant that included a stipend. After hours of frustration trying to get the university to reissue the form, I found this awesome AI tax tool at https://taxr.ai that actually analyzed my situation and all my documents. It confirmed that I could list the income on Schedule C and then offset it with my documented expenses. The tool even helped identify which expenses qualified and how to categorize them properly. It also generated a letter explaining my tax treatment in case of audit questions. Saved me a ton of stress and probably kept me from making an expensive mistake!

Just wanted to update everyone - I tried the taxr.ai site that was mentioned and it was incredibly helpful for my situation. I uploaded my 1099-NEC and the letter from my department explaining the stipend, and the analysis confirmed exactly what to do. The tool explained that since my stipend was for specific research expenses (which I had receipts for), I could report the full amount on Schedule C, then deduct those expenses on the same form. It even helped me categorize my research expenses properly and suggested additional deductions I hadn't considered. Ended up saving me about $400 in self-employment taxes I would have unnecessarily paid! Definitely recommend checking it out if you're dealing with this confusing stipend situation.

For what it's worth, I spent THREE WEEKS trying to get my university to correct a similar issue last year. Called the bursar's office repeatedly with no luck. Finally used Claimyr (https://claimyr.com) to get through to an actual IRS agent to ask how to handle it. They have this service where they get you through the IRS phone queue and then call you when an agent is ready - you can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that if the university won't reissue the form, I should report the full amount on Schedule C and then deduct the legitimate expenses. She said this happens all the time with universities and the IRS is familiar with the situation. Just make sure to keep detailed records of what the stipend covered. Saved me so much stress to hear it directly from the IRS!

Coming back to say I was completely wrong about being skeptical. After struggling with this stipend issue for weeks, I broke down and tried Claimyr. I got connected to an IRS agent within 20 minutes (after previously spending hours on hold getting nowhere). The agent was super helpful and walked me through exactly how to report my research stipend on Schedule C while deducting the associated expenses. She even explained what documentation I should keep to support this approach. Said universities frequently misclassify these payments and the IRS is well aware of the issue. So relieved to have this resolved from an official source! Sometimes it's worth admitting when you're wrong...

I'm actually a university accounting clerk (don't tell my boss I'm here lol). Universities issue 1099-NECs for stipends because it's administratively easier, but it's technically not always correct. The correct form depends on what the stipend was actually for. If it was a qualified scholarship/fellowship for degree candidates: No form required if it went toward tuition/fees/books. If it was for services you performed (research assistance, etc): W-2 should be used. If it was a prize or award: 1099-MISC would be used. If it was a true independent contractor payment: 1099-NEC is correct. The problem is our systems usually default to 1099-NEC for any payment not processed through payroll. You can absolutely request a corrected form, but be prepared for resistance since it creates extra work.

Has anyone had an issue with the university refusing to change the form? I'm in the same boat - got a 1099-NEC for a research stipend that was clearly explained as not being compensation for services in my award letter.

This is basically a misclassification issue. The university is treating you as an independent contractor (hence the 1099-NEC) when you might not actually be one. True independent contractors have: - Control over how they perform their work - Significant independence from the organization - Usually work for multiple clients - Provide their own tools/equipment - Have opportunity for profit/loss If you don't meet these criteria, you might be misclassified. Stipends for research usually should be treated as either scholarship/fellowship income or employee wages. Instead of trying to puzzle through Schedule C, might be worth filing Form SS-8 with the IRS to request a determination of worker status. It's a free process, though it can take 6+ months for a determination.

I'm dealing with a very similar situation right now! Got a 1099-NEC from my university for what they called a "research expense allowance" but it's being treated like contractor income. After reading through all these responses, it sounds like the Schedule C approach with expense deductions is the most practical solution when universities won't budge on reissuing forms. I'm curious though - for those who have gone this route, did you need to get an EIN or business license to file Schedule C? I'm just a graduate student and don't want to accidentally create more complications by making it look like I'm running an actual business. Also, has anyone had success arguing that research stipends should be treated as fellowship income instead? My award letter specifically mentions this was for "educational and research purposes" which sounds more like a fellowship to me.