Author Topic: 1099-G and tax help  (Read 349 times)

CrustyBadger

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1099-G and tax help
« on: December 27, 2024, 01:02:58 PM »
Hi, I'm looking for advice on how to handle taxes for my son's situation.

(Yes he is learning on his own but he asked me to help him out.)

He's in his first job working as a Post Bac position at NIH so his salary is in the form of a 1099 employee.   I think it is technically called 1099-G?

I've never had this type of position, only salaried jobs. We understand he needs (needed) to file quarterly taxes.  But a question he has is ... if he travels for a work related conference, can these expenses be deducted from his taxes, if he is a 1099 employee?

I'd appreciate any thoughts or advice you had to lead us in the right direction.




secondcor521

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Re: 1099-G and tax help
« Reply #1 on: December 27, 2024, 01:27:04 PM »
It's probably a 1099-NEC, not a 1099-G.

He will probably complete Schedule C, listing his income from the 1099-NEC on the income portion towards the top, and deduct any ordinary and necessary business expenses on the expenses part in the middle.

Whether the work conference is deductible depends on the facts and circumstances.  See the Schedule C instructions.

Note that in addition to income taxes, he will probably have to pay self employment taxes.  This would be done on Schedule SE.

He would be entitled to a credit for 1/2 of his SE taxes.  See Schedule 1 line 15.

He would also likely be eligible for the QBI deduction on his self employment income.  Form 8995.

All of the above should be handled by any decent tax software.

He would include all of the Schedules and Forms mentioned with his tax return.

There are a variety of related deductions and tax impacts associated with a Schedule C business related to education expenses, retirement savings, and health insurance premiums that he might want to look into once he understands the basics.

CrustyBadger

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Re: 1099-G and tax help
« Reply #2 on: December 27, 2024, 02:26:18 PM »
Thank you so much!

They say it will be a 1099-G form he will be sent.  The 1099-G form is because it is a "taxable grant" (I think?)

Quote
1099-G tax forms are generated and mailed to Fellows by January 31st. The 1042-S tax forms are sent by March 15th.

https://ofm.od.nih.gov/Pages/Fellowship-Pay.aspx

this is what they are told about taxes:

https://policymanual.nih.gov/2300-320-7#fe22fd16

Quote
AF. Income Taxes
Stipends are subject to Federal, state, and local income tax; however, NIH does not withhold taxes from the trainee’s stipend. The Office of Financial Management (OFM) annually prepares and sends appropriate income information to the IRS and to trainees. Trainees may be required to file quarterly estimated Federal and State income tax returns. Since interpretation and implementation of the tax laws are the responsibility of the IRS and courts, trainees should consult their local IRS office and/or tax advisor if they have questions about the applicability of the current tax code to the taxability of Traineeships, the proper steps to be taken regarding tax obligations, and concerns regarding their own situations.

Since IRTA traineeships are considered awards for training and not wages for services, neither Social Security nor Medicare taxes are deducted from stipends. Although definitive determinations regarding Social Security obligations and coverage must be made by the Internal Revenue Service and the courts, it is the opinion of the NIH Legal Advisor that trainees would not be considered self-employed for purposes of coverage under the Social Security Act and, therefore, cannot make Social Security or Medicare payments on their own behalf. Trainees are encouraged to consult their local IRS office and/or tax advisor.

My thinking here is that since this salary is considered a "taxable grant" by the government, he isn't considered to be "self-employed"?  He doesn't have a business so he can't really deduct attendance at a work related conference as a business expense...?





secondcor521

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Re: 1099-G and tax help
« Reply #3 on: December 27, 2024, 04:49:18 PM »
Yeah, that's a totally different thing, so completely ignore my previous response.

I don't know much about taxable grants other than that they are a thing.  There are implications with respect to the support test, but it sounds like he hasn't been a dependent of yours for a while so you can probably safely ignore those.