1099-Miss (non-employee) for tuition reimbursement - where to report
viper
After going through the groups I am more than confounded by this.
FACTS
=============
Currently I am working part time and going to school fulltime.
My tuition bill for 2006 year was $42000.
I allocated $10000 of these towards my hope credit.
My employer had promised to refund me $5,250 of tuition expenses under
work fringe benefits. However at the end of the year they mailed me a
1099-MISC with $5,250 under non-employee compensation.
My questions:
1) Will this be treated as self-employment income or under other
income - do I really have to file a schedule C for this and pay self-
employment taxes?
2) Can I deduct my tuition expenses against these $5,250 in 1099
income so net is zero and no taxes? If filing schedule C where do I
delete tuition expenses
3) Bottomline - would I have to pay any taxes on this $5,250?
4) Also read somewhere that having a W2 and 1099-Misc from the same
employer is a red flag. What can I do to avoid an audit in this
context?
I got this form late in March so really pushing against the tax
deadline. Any help would be greatly appreciated.
thanks
viper
Phil Marti
> Currently I am working part time and going to school fulltime.
> My tuition bill for 2006 year was $42000.
>
> I allocated $10000 of these towards my hope credit.
At $10,000 of qualified expenses the Lifetime Learning Credit will give you
a bigger tax benefit than the Hope Credit. If you're eligible for the Hope
you can still use the LLC, you just can't use both in the same year. See
IRS Publication 970.
> My employer had promised to refund me $5,250 of tuition expenses under
> work fringe benefits. However at the end of the year they mailed me a
> 1099-MISC with $5,250 under non-employee compensation.
This was wrong. If it's tax-free it should be reported as an information
item on your W-2. If it's taxable it should be reported as wages in box 1
of your W-2.
Before you can accurately file your return you must find out what portion,
if any, of this reimbursement is taxable. That means boning up on the rules
(Pub 970) and then talking to your employer to try to get a corrected W-2.
<snip>
> I got this form late in March so really pushing against the tax
> deadline.
Get an extension to file on Form 4868. You won't have this resolved by
April 17.
--
Phil Marti
Clarksburg, MD
viper
Thanks for the reply.
I tried talking to my employers but their accountant has advised this
as a 1099-misc so I seem to be pretty much stuck with it. I tried the
same points but to no avail. It seems I have to make do with this
1099-
misc to whatever extent I can.
Given this is a 1099-MISC what other options do I have to file as per
questions below - schedule C and is it deductible?
regarding Hope vs lifetime I am actually taking the lifetime - .sorry
about the confusion.
thanks
On Apr 3, 7:51 pm, "viper" <googlegroup...@yahoo.com> wrote:
> Phil,
>
> Thanks for the reply.
>
> I tried talking to my employers but their accountant has advised this
> as a 1099-misc so I seem to be pretty much stuck with it. I tried the
> same points but to no avail. It seems I have to make do with this 1099-
> misc to whatever extent I can.
>
> Given this is a 1099-MISC what other options do I have to file as per
> questions below - schedule C and is it deductible?
>
> regarding Hope vs lifetime I am actually taking the lifetime - .sorry
> about the confusion.
>
> thanks
>
> sandeep
>
> On Apr 3, 5:25 pm, "Phil Marti" <prm20...@verizon.net> wrote:
Phil Marti
> I tried talking to my employers but their accountant has advised this
> as a 1099-misc so I seem to be pretty much stuck with it. I tried the
> same points but to no avail. It seems I have to make do with this 1099-
> misc to whatever extent I can.
File a 1040 including the amount in line 7 wages. Attach Form 4137, which
you'll use to pay the employee's share of SS/Medicare tax with your 1040.
Cross out "Tips" and substitute "Wages" on the 4137.
Since your employer is reporting this as taxable income to you it's
evidently not part of a qualified program that would make it tax-free. (See
Chapter 11 of Pub 970.) Since you're claiming the Lifetime Learning Credit
you can't take the tuition adjustment to income. (Chapter 6 of Pub 970)
viper
1) What you are suggesting seems akin to Schedule C filing - am I
correct in that assumption. In this case perhaps I can deduct some
expenses directly related to this - since this was income for
attending training should I be able to deduct living, tuition and
other expenses which made me eligible to receive this income?
2) My understanding was that those part of the expenses that you were
reimbursed through grants, scholarships etc cannot be counted toward
Lifetime learning credit. Since I have $41000 in tuition plus
additional living expenses and only $20,000 are used for determining
the LLC can I not deduct the remaining $21,000 as expenses against
what I have received from other sources.
thanks again for all your help
On Apr 4, 6:21 am, "Phil Marti" <prm20...@verizon.net> wrote:
Phil Marti
> 1) What you are suggesting seems akin to Schedule C filing - am I
> correct in that assumption.
No. If you reported this on Schedule C you'd have to pay self-employment
tax, which includes both the employer's and employee's shares of SS/Medicare
tax.
> In this case perhaps I can deduct some
> expenses directly related to this - since this was income for
> attending training should I be able to deduct living, tuition and
> other expenses which made me eligible to receive this income?
Maybe you think you should be able to take such deductions, but the law
doesn't agree with you.
> 2) My understanding was that those part of the expenses that you were
> reimbursed through grants, scholarships etc cannot be counted toward
> Lifetime learning credit. Since I have $41000 in tuition plus
> additional living expenses and only $20,000 are used for determining
> the LLC can I not deduct the remaining $21,000 as expenses against
> what I have received from other sources.
No. The only other deduction that's available is the tuition/fees
deduction, and you cannot take that deduction if you're claiming the LLC.
You bring up living expenses, which are never a deduction. You really need
to spend some time in Pub 970.