Recipients of National Defense Science and Engineering Graduate Fellows receive the memo posted at: .
The line "As stated in the NDSEG Terms and Conditions, you are considered an independent contractor, and not self-employed, and are not employed by either the United States Government or ASEE." confuses me.
In particular, I am having trouble reconciling that statement with: "Schedule SE (Form 1040). Include amounts you receive under a scholarship as pay for your services as an independent contractor in determining your net earnings from self-employment. If your net earnings are $400 or more, you will have to pay self-employment tax. Use Schedule SE, Self-Employment Tax, to figure this tax" from Pub
970.No particular service is required under the terms of the fellowship. The fellow simply must remain enrolled in an eligible graduate program. Given that, what does it mean to call the fellow an independent contractor?
My bottom line questions, I suppose, come down to (1) Does and NDSEG fellow have to pay self-employment taxes? (2) Particularly if the answer is "yes," would the fellow be eligible to file a Schedule C and deduct costs associated with his or her studies? More generally, how will NDSEG income be treated for federal tax purposes?
TIA