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Nonprofit Law/stipends and taxes

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QUESTION: Hi - I do some work for a non-profit (501-c3) organization. I do not receive a 1099 from them.
I work from my home - using my own software and computer - they supply me with nothing.
I prepare a newsletter for them once a month and they pay me a stipend after I send it to the printer.

Is this income tax - and if so, what can I write off for expenses? The amount they pay me is 150 a month. Can I deduct rental of my computer and software - telephone and internet services?

Thank you for any help on this. It seems that after all is said and done - we are about even expense wise.

ANSWER: I have in my profile that this free forum is only for general questions relating to IRS federal exemption issues of 501(c)(3) organizations. Even though your question is not an exemption issue, but an employment tax issue, I will direct you.

--- Start of Excerpt ---
A stipend is defined as a fixed sum of money paid periodically for
services or to defray expenses. The fact that remuneration is
termed a "fee" or "stipend" rather than salary or wages is
immaterial. Wages are generally subject to employment taxes and
should be reported on Form W-2, Wage and Tax Statement. Refer to
Publication 15, Circular E, Employer's Tax Guide, section 5, Wages
and Other Compensation, for rules on accountable and nonaccountable
plans for employee business expenses.

The income from stipends is reportable. Is the stipend or fee paid to an employee or an independent contractor reportable?  The answer to this question determines the way that the stipend is reported.  See also the section entitled Employee vs. Independent Contractor.
---End of Excerpt---
http://goo.gl/sC3Tk

So, first you would need to look at that section entitled "Employee vs. Independent Contractor" and let me know whether you are an employee or, in the alternative, an independent contractor. and, after you give me that information I will reply further.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.    







---------- FOLLOW-UP ----------

QUESTION: 1. I have no instructions to follow, except for articles they supply for me to edit.  I use my own tools and software.
2. I have received no training - other than a previous newsletter.
3. They have no financial control over my activities. I supply my own supplies, computer and software.
4. They do not reimburse me for equipment or supplies.
5. I invest in my own stuff.
6. I can work for anyone I wish to.
7. I am paid a flat fee after the newsletter goes to the printer.
8. I have no written contract.
9. I receive no benefits.
10. Either party can quit each other any time.
11. I produce a Newsletter. While it's important to the organization, they could exist without it.

From the answers to the questions - it appears that I am an independent contractor, not an employee. I do not receive a w2 - or 1099.

Thank you for any help - I have been so confused.

Answer
The income is taxable and you can deduct the direct expenses as detailed in the IRS Publication entitled "Business Expenses" which is available at
http://www.irs.gov/publications/p535/index.html

The nonprofit is supposed to have provided and file a 1099-Misc for you. A individual may not be a business but still, if not an employee, would receive the 1099-Misc for any payments over $600 annually.
See  http://www.irs.gov/pub/irs-pdf/i1099msc.pdf which is the IRS'
instructions for form 1099-Misc. But, even though they are not filing the 1099-Misc with the IRS, the income is taxable to you and you are required to declare it if you file federal income tax returns.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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