Please note that your fellowship stipends have been included in Box 3 of your 1099 and categorized as "non-employee compensation". If you choose to report this income on Schedule C, a statement should be attached to your return stating that such income is not subject to social security or self-employment tax. If you choose to report this income as "other income" on Line 21 of Form 1040, it is not necessary to attach an additional statement. It is recommended that you report your fellowship income as "other income" to avoid any confusion with the IRS.
Q: If you pay more than you actually owe when submitting your estimated taxes, will you receive the money back?
Yes, you have the option of requesting a refund or applying the amount to the following year's tax liability.
Q: The instructions on the moving expense worksheet include storage costs as eligible deductions. However, it is unclear whether there is a 30 day limit on the allowable deduction OR if the items had to be stored within 30 days of the move to be eligible.
The latter is true, items must be stored within 30 days of the move to be eligible. Please consult tax advisor for limitations on the length of time that you are allowed to store your items and still claim deductions. Also, if you are working abroad and need long-term storage, please consult your tax advisor.
Q: Do we need to include what we spent from our travel and health allowances as part of our income for tax purposes?
No, since these expenses are reimbursements, they are not included in your 1099 and should not be reported as income.
Q: What are common tax mistakes made by people with a fellowship stipend?
The most common tax mistake made by a fellow is paying self-employment tax, when after further review, it was determined that he/she was not required to pay self-employment tax.
Q: What about social security payments?
If a fellow chooses not to report their fellowship stipend income as self-employment income, such income is exempt from social security tax. Please note that self-employment tax consists of medicare and social security tax.
Q: When should we contact the accountant if we want him to prepare our taxes?
As soon as you receive all you tax information.
Q: A fellow lives in Maryland as part of the ASPH/CDC fellowship
(9/2003-present). The fellow is a resident of California. Outside of
the fellowship stipend, the fellow earned income during the 2004 tax
year from Michigan (under $500) and Virginia (under $3000). What tax
forms and supplemental forms should be filed?
Please consult your tax advisor since this is a unique situation and state tax laws vary.
Q: Are unreimbursed fellowship-related expenses (conferences, books,
journal subscriptions, health insurance) tax deductible? What tax
forms and supplements are needed to file these claims?
Yes, unreimbursed fellowship-related expenses are tax deductible. However, health insurance is generally only deductible if the fellow chooses to categorize their stipend as self-employment income. Unreimbursed fellowship-related expenses are to be reported on Schedule C.
Q: What tax forms and supplements are needed to report income earned
from stocks and bonds?
Schedules B and D; please see the instructions for the forms for reporting thresholds and further information
Q: How do we categorize income from speaker fees for work-related conferences? Are they considered gifts or self-employment (i.e. consultant) fees?
Speaker fees are considered consultant fees and should be categorized as self-employment income. Such income is subject to self-employment tax if over $400.
Q: I only received one copy of my 1099. Will I get copies to include with my federal and state tax returns?
Unlike W2s, 1099s are not usually submitted with the tax returns. The 1099 should be retained by the tax payer.
Q: Recently, I received a letter from the IRS charging me with self-employment tax and the amount is quite substantial. What do fellows do in such a situation? I know that fellows should not be assessed as self-employed. How do I convey this to the IRS?
Fellows should include a summary of the facts from the memo distributed by ASPH each year and attach a copy of the memo and reference it in a brief letter, stating only the facts. The letter should include a reference to the IRS notice, including notice date, notice number, tax form and tax year. The opening sentence should read as follows: "I am in receipt of the above referenced notice proposing changes... and I am not in agreement with these proposed changes." Then summarize the memo. The letter should be sent certified mail, return receipt requested. Fellows will probably not receive a response to their first reply. Upon receiving a second IRS notice, they should draft a new letter which would be, in effect, a repeat of the first response updated with the information for the second notice. The second response should reference their first reply and include a copy. This response should also be sent certified mail, return receipt requested.
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