I'm a tax preparer and see this scholarship/1099-NEC issue every year with increasing frequency. You're absolutely right to be confused - scholarships should NOT be reported on 1099-NEC forms unless you actually performed services for the organization. The foundation's explanation about being a non-profit doesn't justify using the wrong form. Many non-profits issue scholarships correctly using 1099-MISC (Box 1) or coordinate with schools for 1098-T reporting. Here's my professional advice: 1) Call them back and specifically request they issue a corrected 1099-MISC instead, citing IRS Publication 970 2) If they refuse, you'll need to report it as "Other Income" on Schedule 1 (NOT Schedule C which would trigger self-employment tax) 3) For any portion used for qualified educational expenses (tuition, required books/supplies), subtract that amount and note "SCH EXCL" This is becoming such a common problem that I keep IRS Publication 970 handy to explain proper scholarship reporting to confused foundations. Don't let their mistake cost you unnecessary taxes - scholarship money should never be subject to self-employment tax when it's truly an educational grant with no work requirements. Keep all documentation showing how you used the funds in case the IRS has questions later!

I'm a tax advisor and want to emphasize something crucial that hasn't been mentioned clearly enough: DO NOT ignore this 1099-NEC even if you think it's wrong! The IRS receives a copy of every 1099-NEC issued, and their automated matching system will flag your return if they don't see that income reported somewhere. This can trigger correspondence audits or notices that are much more hassle to deal with than just reporting it correctly upfront. Here's the safest approach: 1) First, absolutely try to get the foundation to issue a corrected 1099-MISC - many will cooperate once you explain the proper IRS requirements 2) If they won't budge, report the full amount on Schedule 1 Line 8i as "Other Income" and write "SCHOLARSHIP" 3) If you used any portion for qualified educational expenses (tuition, mandatory fees, required textbooks), you can exclude that portion by reporting it as a negative amount on the same line with notation "SCH EXCL" 4) The key is NEVER let this flow to Schedule C where it would be subject to 15.3% self-employment tax Keep detailed records of your scholarship award letter and receipts showing how funds were used. The IRS understands that some organizations issue incorrect forms, but they need to see that you handled the reporting appropriately. Better to spend a few extra minutes reporting it correctly than to deal with IRS notices later asking why you didn't report income they have on file!

The timing of your US citizenship might actually be the most important factor here! If you weren't a US citizen when you signed over the rights OR when the property was sold, the whole situation might be much simpler. Did your brother send the money after you became a US citizen? If so, then it's probably just a foreign gift to a US person. You'd need to report gifts from foreign persons over a certain threshold on Form 3520. But if the money was sent while you were still a Philippine citizen and then you became a US citizen afterward, different rules apply. The whole transaction might be outside US tax jurisdiction entirely.

Based on your timeline, this creates an interesting jurisdictional situation. Since you were a Philippine citizen when you signed over the rights but are now a US citizen receiving the money, you're likely looking at this as a foreign gift for US tax purposes. The key factor is that you relinquished legal ownership years ago as a non-US person, and now as a US citizen, you're receiving money from your brother (a foreign person) based on his generosity rather than any legal entitlement you currently have. You'll want to report this on Form 3520 if it meets the threshold requirements for foreign gifts. The good news is that as the recipient of a gift, you typically don't owe income tax on the amount - that's your brother's concern from a gift tax perspective. However, I'd strongly recommend getting professional advice before filing anything. An international tax attorney can review the specific facts and timing to confirm whether this is indeed gift treatment or if the IRS might view it differently based on the "beneficial ownership" concept others mentioned. The fact that your brother is honoring the original inheritance proportion despite the legal transfer could complicate things. Document everything - the original inheritance, the transfer of rights, and the basis for receiving this money. You want a clear paper trail that supports whatever filing position you take.

I've been following this discussion closely as someone who recently went through the same decision process, and I wanted to share a few additional considerations that might be helpful. One thing that really influenced my decision was the investment flexibility difference. With a DAF, you're typically limited to the investment options provided by the sponsoring organization (Fidelity, Schwab, etc.), which are usually quite good but still limited. Private foundations give you complete control over investment decisions, which can be valuable if you have strong investment preferences or want to pursue alternative investments. Another factor worth considering is the geographic flexibility for international giving. Many DAF sponsors have limitations on grants to foreign charities, requiring them to go through intermediary organizations. Private foundations generally have more flexibility here, though they need to exercise expenditure responsibility. The timing aspect mentioned earlier is crucial too. With the current 60% limit potentially dropping to 50% after 2025, and given the political uncertainty around extending it, there's a real advantage to maximizing DAF contributions in the next couple of years if you're in a position to do so. For anyone still weighing these options, I'd recommend running the numbers for your specific situation across multiple years, not just looking at the immediate tax impact. The carryforward provisions can significantly affect the real-world benefit of the different deduction limits.

This has been such an enlightening discussion! As someone who's been wrestling with the same DAF vs private foundation decision, I really appreciate all the detailed explanations about the historical reasoning behind the different deduction limits. One aspect I haven't seen mentioned yet is the impact of state taxes. While we've focused on federal deduction limits, some states have their own rules for charitable deductions that might differ from federal treatment. Has anyone here dealt with state-specific considerations when choosing between DAFs and private foundations? Also, for those who mentioned using tax planning tools or speaking with IRS agents, did you get any guidance on how the SALT (State and Local Tax) deduction cap interacts with charitable giving strategies? I'm in a high-tax state and wondering if maximizing charitable deductions becomes even more valuable when you're hitting the $10,000 SALT cap anyway. The timing considerations around the 60% limit potentially reverting to 50% after 2025 are really compelling. It sounds like there's a real window of opportunity here for those of us who can accelerate our charitable giving timeline.

I went through this exact same situation last year and it was such a headache! The key thing to understand is that when excess contributions are returned from a Roth 401k, only the earnings portion is taxable, not the original contribution amount since you already paid taxes on that money. Your employer should have calculated the earnings on the excess amount and provided you with a breakdown. If they just returned a flat amount without separating the earnings, you'll need to ask them for the calculation. The earnings portion gets reported as taxable income in the year of the distribution. Make sure your 1099-R has the correct distribution code too - it should be code "P" for excess contribution corrective distributions. If it shows a different code like "1" or "J", contact your plan administrator immediately to get a corrected form. Filing with the wrong code can trigger unnecessary penalties and IRS notices. The good news is you caught this and got it corrected, which is the most important part. Just make sure all the paperwork is right before you file!

I'm dealing with a very similar situation right now and this thread has been incredibly helpful! I changed jobs twice in 2025 and ended up with excess contributions across three different 401k plans - what a nightmare to sort out. One thing I learned that might help others: if you have excess contributions from multiple employers in the same year, you need to have the excess removed from the plan that received the last contribution first. So if you contributed to Plan A in January-March, then Plan B in April-December and went over the limit, the excess should come from Plan B first. Also, I found out that some plan administrators will automatically remove excess deferrals if they detect you've gone over the limit, but others won't catch it at all. It's definitely worth checking your total contributions across all plans mid-year if you switch jobs to avoid this headache entirely. The tax reporting gets even more complicated when you have multiple plans involved, so I'm definitely going to look into some of the resources mentioned here. Thanks everyone for sharing your experiences!

The perception differences are fascinating, but I think we're missing a key factor - the actual size and complexity of the systems. The IRS processes over 150 million individual returns annually compared to the CRA's roughly 30 million. That scale difference alone creates different operational realities. What strikes me most is how this translates to enforcement capacity. The IRS has specialized units for high-wealth individuals, international tax issues, and criminal investigations that dwarf anything the CRA has. When you have dedicated teams with that level of resources and expertise, enforcement actions naturally become more sophisticated and newsworthy. I also wonder if the different political environments affect these agencies. The IRS operates under much more political scrutiny and funding battles in Congress, which might actually force them to be more efficient and results-oriented to justify their budget. The CRA seems to operate with less political interference but maybe also less pressure to innovate or improve. Has anyone noticed differences in how quickly each agency adapts to new tax law changes? In my experience, the IRS seems to get guidance and forms updated faster when tax laws change, while the CRA sometimes takes months to clarify new provisions.

This has been such an enlightening discussion! As someone who's only dealt with the IRS (moved to the US from a non-tax treaty country), I had no idea the differences were this pronounced. What really strikes me from everyone's experiences is how the enforcement approach seems to shape the entire taxpayer relationship with each agency. The IRS's reputation for thorough enforcement creates this culture of compliance-through-fear that, paradoxically, might actually lead to better taxpayer education and professional services. I'm also fascinated by the technology and customer service evolution everyone's describing. It sounds like the IRS has made genuine improvements in recent years - maybe the constant political pressure actually forces innovation? Meanwhile, it seems like the CRA might be coasting on Canada's generally more trusting relationship with government institutions. One thing I'm curious about: do these perception differences affect how each country's tax law is written? If American taxpayers are more likely to hire professionals and challenge the IRS, does that lead to more detailed regulations and clearer guidance? And if Canadians are more trusting of the CRA's discretion, does that allow for more vague rules that rely on agency interpretation? The cross-border enforcement capabilities that several people mentioned are particularly eye-opening. It really sounds like the IRS has invested much more heavily in international tax compliance, which explains why US expat tax obligations feel so much more serious than what I hear about from Canadian expats.