This message has been cross posted to the following Discussions: Federal Tax and ncCPAp on the GO! .
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We have a new client that is a masters/PhD student. She receives a stipend for living expenses. My understanding is the funds are taxable as other income (not earned) to taxpayer less any educational expenses (tuition, books, etc.) taxpayer may need to purchase (Code Sec. 117(b)(2)). No 1099 or W2 is issued as per IRS Regulations. The two years' prior accountant treated the income as earned and placed on Line 7. The immediate previous accountant said it was not taxable. The university, which shall not be named but is pronounced with a strong Boston accent, has sent various paperwork, but no official guidance. They suggest calling the IRS. Does anyone have a different opinion on the treatment? Otherwise we need to amend taxpayers' 2012 and 2013 tax returns.
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Jeffrey Winer
WINER CPA PC
Framingham MA
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