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TurboTax is correct. If your 1099-MISC form has an amount is Box 7, Nonemployee Compensation, the IRS requires you report it as if you're self-employed even if it's for an internship.
Self-Employment (Schedule C) is work you did where you weren't an employee. To enter your 1099-MISC form:
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Source: TurboTax FAQ andTurboTax FAQ 2
Although it may be news to you that you “have a business” (and most of the other people who get their first 1099-MISC); The IRS considers anything in box 7 of 1099-MISC to be self employment income. Enter the 1099-Misc income, at Other Common income / income from a 1099-MISC . TurboTax (TT) will complete Schedule C or C-EZ for you and allow you to deduct any expenses associated with this income. You'll also have to pay self employment tax (social security & Medicare) on any profits greater than $400. These types of payments are frequently done this way. Your "employer" is not the only one.
The IRS also considers undocumented cash income (no W-2 or 1099-MISC), for work performed, to be self employment income.
You may have to upgrade to the Self Employment version of TT. If you have no expenses to deduct, there's a chance you may be able to use TT Deluxe or Premier. Enter your income at the 1099-Misc screen (even if you didn't get a 1099-misc).
In TurboTax (TT), enter at:
- Federal Taxes tab
- Wages & Income
-Scroll down to:
- Other Common Income
-Income from Form 1099-Misc
When asked why you got the 1099-Misc, select “Freelancer or Independent contractor”
While the facts are limited it seems very suspect to me that an intern would receive a form 1099.
In my experience, an intern, would generally be under the direction and supervision of an employee(s) at the business. As a result, interns would generally receive a W-2.
It is doubtful that you will be able to get this corrected, if applicable, but as @Hal_Al indicated, in many cases this results in an unexpected surprise. Going forward, make sure you understand how you will get paid so you can plan for the income tax consequences accordingly.
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