Consulting and 1099-NEC for a college student

[Wallrat]

We live in Maryland.  Our full-time college student daughter is in school in Minnesota.  She was hired by a small non-profit out of Iowa to do part-time social media posts.  All the work she did for them was remote from MD (in the summer) and MN during the school year.   In 2022 she earned just under $3,600 from them and was issued a 1099-NEC.

She also worked at the college in Minnesota and got a W-2.

Do I need to file state taxes in Iowa, Minnesota, and Maryland? 

As her permanent address is in Maryland - would that  be the location of her 'consulting' business?  (There is no actual business - she's just doing this for them.)  Turbo Tax is having me fill out a schedule C.

[TeresaM]

No, she will not need to file in all three states. In most states, the income is reported in the state you are physically when you did the work, not where the company is located. So she not need to file in Iowa for the Form 1099-NEC.

In Maryland, she would be required to file a return if she is required to file a federal return. She will be required to file a federal return if single and under age 65 if she made over $12,950 or if she makes money from self-employment. So, her Form 1099-NEC and other income will need to be filed with the IRS and the portion earned in Maryland will need to be filed in Maryland. 

When she goes to college in Minnesota, it will not impact her permanent residency at your home, in Maryland. She will still count as a Maryland resident. If she was physically in Minnesota, and remote working while at school, she will need to prepare a Minnesota state return based on the income that was earned while she was there, if it totaled $12,900 or more. It will be a non-resident return, because she do not have to give up her Maryland residency to go to school. 

Per the Minnesota Department of Revenue web site, she will not need to file a Minnesota return unless her Minnesota income is over $12,900.

[Wallrat]

Thank you Teresa M!

Follow up question, because it is a 1099-NEC form - turbo tax is having me fill out a schedule C.  I have to Select the business that generated this income.  She was managing social media feed for the non-profit.  Would that be a consulting business or something else?  As she is a student she isn't really running a business.

[Bsch4477]

Understand that earned income is taxed in 2 ways. Either you are an employee and social and Medicare tax payments are shared by employer and employee or you are self employed and pay those taxes yourself. The former receives a W-2 and the latter a 1099-NEC. So your daughter is self employed. She has a business and completes Sch C. Doesn’t much matter what you call the business. Consulting is fine.