Fellowship travel deductions

[lshuling]

I have a client that is a NRC (National Research Associate) that is a guest investigator residing in a host lab conducting research on her own. Her income is considered a grant and not subject to SE taxes by the IRS. She is a resident alien and the income is reported to her in a letter as: Stipend $55,000, Travel $5,000, Health Ins Premiums $2200.
I will report her income on line 7 of the 1040. She was told when hired that she could deduct her travel and that it would not be subject to the 2% AGI. Anyone know where I would put this deduction? Thanks, Lisa

[Bees Knees]

It depends

How was the income reported to your client?

W-2?

1099?

[lshuling]

It was simply reported to her in a letter. She had an attachment stating that the stipend, travel, and health insurance premiums were all taxable. I have talked to two people at the IRS and searched every Pub ie: Res/NonRes Aliens, Education Fellowship/Grants, Travel, Misc deductions, form 2106.... I can not find anything. Beginning to think this is a he said she said. Lisa

[S T]

Had a similar

I had a similar t/p in New York - post doctorate fellowship as part of Natl Research Assoc Program (that is where she received the Grant from - or from other Agencies under Natl Res Assoc (maybe referred to as NRC)) - We had the letter, but no 1099 MISC or W-2 issued. Apparently there is something (as an agreement/contract) that is signed at the time they are awarded the fellowship.

Excerpts of the t/p explanation on the income not being reported on 1099 or W-2
"My income is taxable and I do have to pay social security as a self employed person, - Per the instructions with Natl Research Assoc - I show income as a contractor, and treated as self employed. (Note- could be under more than one grant/agency)

She had to live on something!!! So we reported on schedule C - as she was considered independent contractor and then used associated Sched C expenses.

If this is the same organization that you are referring to try this link http://sites.nationalacademies.org/PGA/RAP/PGA_047746

Hope this helps you,

Sandy

[lshuling]

The letter states this income is not subject to SE tax if personal services are not provided as a condition for an award. This person decides her own research, travels to what conferences she wants, and works at her own pace. If she patented something, it would be hers to keep. I believe she meets the criteria in that letter. Therefor, the only place to deduct travel in my mind would be Sched A subject to 2% AGI.