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Tax Law (Questions About Taxes)/should church report Scholarship on 1099

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Question
Hi John,

Our church is supporting a Seminary student who is also serving at our church as intern. We have different supporting resources this year and would like to know how to report scholarship for the tax purpose in each case.

case 1. Last school year, we paid for intern's service each month. We withheld part of the stipend to pay his tuition directly to the seminary.

In this case, does church need to report the part we paid for his tuition as his income?  If so, should it be on MISC 1099 together with the other compensation?

case 2. The intern finished one degree, and now pursuit another degree at seminary this school year.  This time, church offered him scholarship from church's scholarship fund. The scholarship rewarded is not conditioned by his serving as intern.  That is, regardless he is serving at our church of now, we will offer him scholarship as long as he is studying at the seminar for the degree.  At same time, since he is serving as intern, we do pay him some stipend.

In this case, does church need to report the scholarship? If so, should it be on MISC 1099 together with the other compensation, or on a different box?

Thank you.

Answer
Willa,

Thanks for your question.

No, the church does not need to report the tuition payments or the scholarship. However, to assure that the funds are applied toward his seminary expenses, you should send the scholarship directly to the seminary, in his name - as you have been doing with the tuition payments.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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