Are stipends paid through AP to students for research and development subject to 1099? If so, in which box does this need to be reported?


You do not report the stipend on a 1099, although the stipend may be taxable to the student. The Instructions for Form 1099-MISC state on page 2 that scholarships/grants are never reportable on a 1099. Note that for IRS purposes, their definition of grant includes what universities tend to refer to as stipends. The only time a grant payment is reportable is if the student must perform specific services for your school on order to receive the funds, such as teach a class or work in a research lab. For this reason, these grants are reported on a W-2. It sounds as though this applies in your case.

Even if not reportable by the college, the student may have to pay taxes on the stipend funds. This is where Table 1-1 on Publication 970 becomes helpful. It includes a grid outlining when scholarship/grant payments become taxable to the student. Note that some grant payments are taxable, but not reportable. It is the students' responsibility to keep track of stipend payments so that they can report the taxable portion as income on their personal tax returns.

Based on the information you provided, it appears that the stipend recipients are performing services for your school, meaning you would report the payments on a W-2. But IRS rules say you do not have to report these payments on a 1099 at all.

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