My son has 18k in internship stipends. He got form 1099 NEC. How to report to avoid self employment tax

[AmyC]

Yes, if you go through the education section, the program will know what it is so it should calculate the correct deduction.

[Hal_Al]

Q. If I put it under scholarship in the education section with the other 1098T information, will there be an issue since it is not real scholarship or grants? 

A.  Yours is a very common question in this forum.  The most frequent reply is to report stipends as scholarships. 

Q. Will IRS question the return if I don’t enter it as Form 1099 NEC for the stipends? 

A. No, because there is no way to enter a 1099-NEC for stipends. 

But, there is a chance of hearing from the IRS because it was not reported as self employment. The IRS considers anything on a form 1099-NEC to be self employment income. 

[lukassandau]

I would love to choose that option under "uncommon situations" but unfortunately that option for it not being self-employment is not coming up for me when I'm entering my 1099-NEC info.

[AmyC]

You may have marked it already so that the form needs to be deleted and entered again. You may have data stuck. Follow these steps:

Desktop version: 

1. Delete the form 1099-NEC and schedule C
2. Save your return while closing the program.
3. Update the program
4. Open
5. Enter the information again.

Online version:

A full or corrupted cache can cause problems in TurboTax, so sometimes you need to clear your cache (that is, remove these temporary files).

For stuck information follow these steps:

1. Delete the 1099-NEC and schedule C see How to Delete  
2. Log out of your return and try one or more of the following:
   • Don't use Internet Explorer.
   • Clear cache and cookies,
   • Sign in using a different browser.
   • Sign in using a different device.
3. Log back into your return.
   • Enter the information again.

@lukassandau 

[Hal_Al]

 I would love to choose that option under "uncommon situations" but unfortunately that option for it not being self-employment is not coming up for me when I'm entering my 1099-NEC info.

That's correct. "You can't get there from here".

The best you can do, in the 1099-NEC interview, is choose "This is not money earned as an employee or self employed person; it is from a sporadic activity or hobby".  That will put the income on line 8z of Schedule 1 as  "Nonemployee compensation from 1099-NEC", which is unearned income ("other income"). 

If you want it to be treated as earned income, you're going to have to enter it somewhere else.  The original poster identified his income as "stipend".  Stipends are reported as taxable scholarship. 

[taxquestions18]

I eventually entered the intern stipends under the scholarship in the education section, as additional scholarship, and indicating the amount was not used for tuition and fee. By doing this, the amount showed up as “additional income” for scholarships on Schedule 1. And the standard deduction of $13850 applied instead of the $1100 for unearned income  (don’t remember the exact number). If you put it under the “other income” in turbo tax will apply the deduction of $1100. 
So basically I reported the income but didn’t do it as 1099NEC or schedule C. And I got the higher deduction as earned income for scholarships, but the remaining amount after deduction was tax at my rate (kiddie tax) as unearned income. I finally understand what the previous comment meant when they say”hybrid” of earned and unearned income for scholarships. 
I will just try to explain to IRS if they question about the 1099 NEC form and self employment tax.

[Brothel245]

Entering Information in TurboTax:

1. Log into your TurboTax account.
2. Select "Wages and Income."
3. Go to "Less Common Income."
4. Click on "Miscellaneous Income, 1099-A, 1099-C" and then "Start."
5. Scroll to the bottom of the page and select "Other Reportable Income."
6. Choose "Other taxable income" and answer "Yes." 7

You may also read this comprehensive guide about understanding internship legal requirements