YEARUP STIPEND

[Pacun]

Year up sent a letter to my client stating... "during 2016 you received educational reimbursements from Yearup. This stipend income is not for services performed but is a scholarship and it is taxable".

The amount is about 5k and it is correctly reported on line 7 with a SCH label.

When I interview this millennium, he didn't why they gave it to him... so I am wondering if he might qualify for any educational credits. He didn't attend any university so I told him he was going to pay taxes on it and that was it.

I have the return ready to be efiled but I just want to check if I missed something since I have never dealt with Yearup.

[RitaB]

He didn't know why they gave the letter to him?  I don't know why they gave the money to him.  But if they want to give me $5,000...

I don't know who Year Up is but Year Up appears to know what you know.  That this is taxable income.  Here's a link to Publication 970.  I would probably print the applicable part for the client.  I don't know why everybody thinks everything is free.  Well, yes, actually I do... 

If they are reimbursing education expenses he had in past years, I would guess somebody has taken tax credits or tuition deduction if they qualified.

https://www.irs.gov/publications/p970/ch01.html#en_US_2016_publink1000178003

 

[JohnH]

I did a quick check, and a cursory look indicates it works similar to Pell Grants. It's probably taxable income unless he can produce documentation to the contrary. 

[Lee B]

Year Up is a 1 year program ( Modern version of Job Corp ) that provides disadvantaged youth with 6 months of classroom training followed by a 6 months internship with a local business with the possibility of being hired as a regular employee at the end of the 12 months. They receive a monthly stipend of $600 to $ 1,000 plus various incidental expenses like transit fees etc.  So it's probably all taxable. 

[Terry D EA]

After cbslee's explanation, I will agree he is right and the total is taxable. As an evaluator for a National organization, I have evaluated a few job corps for a National Accrediation for their automotive programs. Students do receive this type of support so again, it is all taxable. Maybe if you pick his brains a bit about his past maybe he'll remember.