I am a graduate student and I receive a stipend that pays my living expenses, through a national fellowship that I was awarded. The fellowship never withholds taxes of any kind, and so I have been making quarterly estimated payments throughout the year. This is the second year of paying taxes with this fellowship, so I've done this once before, but this year things seem odd.
I earned roughly $31,000 in income from this fellowship (monthly stipends of around $2600). This was reported to me on a 1099-misc form in box 3 "other income."
When I fill out my information in the web-portal through H&R Block, however, it says that my base taxes owed are about $6500. This works out to be almost a 21% tax rate, which doesn't seem plausible for someone earning such a small amount and working only as a full-time student.
But I can't see where my error might be coming from. I just put in the information as if it was from a Schedule C (this is what the H&R Block interface suggested that I do). I believe it is treating me as though I qualify for some very high "self-employment" tax rate. But I don't think this can be correct because I'm not really self-employed. This just happens to be the manner in which my funding agency delivers their tax data (basically just so they can avoid worrying about deducting taxes from student stipends across many states and in many unique situations).
My tax rate certainly wasn't this high last year, but I filled out the H&R Block online forms exactly the same way.
Any suggestions on what's going wrong / how I should report this?
When I read the tax document provided by my funding agency, it specifically says that I am treated as an independent contract, but not self-employed. That's the specific wording. How do I communicate that I am being paid as an independent contractor, but that I am not supposed to be paying the self-employment tax? (I'm fairly sure this kind of arrangement is common for science fellowships and research grants.. that is, you're not taxed for self-employment (a silly thing to do to a student already barely able to pay bills... why would they accept the fellowship and earn less than peers who don't accept fellowships?), but you do receive a 1099-misc).