Question - Can I claim EITC with 1099-Misc classified as "other income"?

A research stipend on a 1099-MISC with Box 3 is a bit tricky. The key distinction here is whether this money was compensation for services (work) or a grant/scholarship for your education. If the stipend was truly compensation for work you performed (sounds like it was for a summer job), then it should generally be considered earned income for EITC purposes. However, Box 3 reporting from the university suggests they don't consider it wages or self-employment income. For tax purposes, you have two legitimate options: - If you believe the income was misreported and should be earned income, you can report it on Schedule C and claim EITC, but you'll face self-employment tax. - If you report it as "other income" on Line 8, you avoid self-employment tax, but as you discovered, it won't qualify for EITC. This is a common issue with university stipends. The correct approach depends on the exact nature of your work arrangement. Did you have freedom to control how/when you did the research, or were you working under close supervision?

I went through almost the exact same situation three years ago! After hours of research and talking to different tax people, I discovered taxr.ai (https://taxr.ai) which was incredibly helpful for sorting out this exact stipend/EITC confusion. What I learned is that university stipends are in this weird gray area, and the IRS guidance isn't super clear. When I uploaded my 1099-MISC to taxr.ai, it analyzed the document and helped determine the correct classification based on the specific wording on my form and supporting documents from my university. For me, they found language that supported treating part of my stipend as earned income! The tool also found some educational expense deductions I was missing that helped offset some of the self-employment tax. Might be worth checking out if you have your award letter or any documentation about the stipend beyond just the 1099-MISC.

After some initial skepticism, I decided to try taxr.ai for my fellowship stipend situation. I'm actually really surprised by the results. I uploaded my 1099-MISC, award letter, and program description - the system found specific language in my award letter stating the stipend was "in consideration for research services" which was key. Based on this analysis, I was able to properly document treating a portion of my stipend as earned income for EITC purposes while reporting the rest as other income. The tool generated a detailed explanation I could attach to my return explaining the position. Even better, it identified a tax court case (Spears v. Commissioner) that had facts similar to my situation where the court ruled in favor of the taxpayer. I've already filed and received my refund with no issues. Definitely worth checking out if you're dealing with this stipend/EITC confusion.

This stipend situation can be so frustrating! After dealing with conflicting advice from three different preparers, I tried calling the IRS directly to get a definitive answer on how to handle my research stipend. What a nightmare - spent HOURS trying to reach someone! Finally found Claimyr (https://claimyr.com) with their video demo at https://youtu.be/_kiP6q8DX5c and decided to give it a shot. They got me connected to an actual IRS representative in about 20 minutes when I had been trying unsuccessfully for days. The IRS agent confirmed that in my specific case, the stipend could be reported as earned income IF I could document that it was payment for services rather than just financial aid. The IRS agent walked me through exactly what documentation I needed to keep with my records to support this position. Without that conversation, I would have just given up on the EITC entirely.

I'm genuinely shocked to report back about using Claimyr. After expressing my doubts, I decided to try it myself since I had other tax questions beyond just the stipend issue. I was connected to an IRS agent in about 15 minutes, which was miraculous considering I'd wasted hours previously. The agent transferred me to an EITC specialist who explained the exact criteria they use to evaluate whether a stipend counts as earned income. The key factors: whether the primary purpose was to compensate you for services rendered vs. providing financial aid, and whether there was a service requirement attached to receiving the funds. They explained that Box 3 reporting isn't definitive - it's how the university chose to report it, but the actual nature of the payment is what matters for tax purposes. I now have clear documentation requirements if I decide to treat my stipend as earned income. Completely worth it for getting a definitive answer straight from the source instead of conflicting advice online.

Just wanted to share my experience as someone who's been in a similar situation. I had a fellowship stipend a couple years ago and actually got audited after claiming EITC on it. The key factor the IRS looked at was whether the primary purpose of the payment was to enable me to pursue my studies (not earned income) or to compensate me for services (earned income). In my case, even though I did research, the stipend agreement specifically stated it was to "support my academic studies" with no specific work requirements, so they determined it wasn't earned income. My advice: look carefully at the language in your award letter or agreement. That will be your strongest evidence one way or the other. If it mentions "payment for services" or has specific work requirements, you have a better case for earned income. If it talks about "supporting your studies" without specific work requirements, it's probably not earned income.

One thing nobody's mentioned yet - did your 1099-MISC come with any supplemental statements or notes from the university? Some schools provide guidance about how they expect students to report these stipends. I had a similar issue with an $8k research stipend. My university actually provided a letter stating that while they report stipends in Box 3, they consider them payment for services when the student is not degree-seeking in the program providing the stipend. In my case, I was an undergrad doing summer research in a lab, not pursuing a graduate degree in that department, so based on the university's own guidance, I was able to justify treating it as earned income for EITC while still reporting it as they had on the 1099-MISC.