Question Regarding Internship Stipend (1099-NEC).

[dimamid22]

Hello,

I live in Texas, but I had an summer internship out in Rhode Island (stayed there for couple of months). I received a stipend of $10,000. The employer didn’t withhold any income tax (federal, state, etc.), only the first box (1 Non-employee compensation) is filled with the amount above.
 How do I proceed in filing my taxes? Do I file with Texas? Also I’m assuming turbo tax will perform the required tax withheld percentage (That is including Texas tax and Rhode Island’s?) calculations from my stipend, right? 

Any help would be appreciated. 

[DavidD66]

You will have to report your internship income as self-employment income on schedule C.  You will also be able to deduct any related expenses you incurred.  Texas does not have an income tax, so you don't have to file a Texas state tax return.  You will have to file a non-resident Rhode Island tax return.  In order to file Schedule C, you will need TurboTax Self-Employed if you use the online version.  If you use the Desktop/Download software, you can use any version, but only Home & Business will have the interactive questions to guide you through entering your self-employment income and expenses.  

[dimamid22]

@DavidD66 
Thanks for the quick reply! What if I have W-2 from working in 2022 in Texas as well. 
Do I need to file twice? One where W-2 is for Texas as I worked there and another one the non resident RI tax return? 

[Hal_Al]

Q. Do I need to file twice? 

A.  No.

You file one non resident RI return.  TurboTax (TT) will transfer the data from the federal return to the RI return.  The RI interview will ask you to allocate your income. Allocate the W-2 income  as non RI income.

I'm not specifically familiar with the RI software. But, this technique is sometimes helpful in your situation: if boxes 15-20, on your W-2 are blank, at the W-2 screen, in TT,  enter TX in box 15 and the box 1 amount in box 16.  The W-2 screen is in the federal section.

[KrisD15]

You will file a Federal Return.

You will file a Non-resident  (or Part-Year resident depending if you actually lived there) for RI and claim only the income you earned while living in RI.

TurboTax will ask you how much to allocate to Rhode Island. 

Texas has no state income tax, so you do not file a TX return and you do not pay any state tax on the income you earned while living in Texas.  

[dimamid22]

Hi,

Everyone gave great advice. I just had a follow up question. Is there an alternative to TurboTax Self-Employed option? Can the deluxe version work if I’m not doing any deductions?  

[ChondelLO]

For a TurboTax Online Products comparison chart, please visit the link below to choose the best product for your specific needs.

https://turbotax.intuit.com/personal-taxes/compare/online/

For information on how to switch TurboTax products, please visit the help article below.

Can I downgrade to a lower-priced version of TurboTax Online? - Intuit

[Garciahome]

IRS lumped all income from non-employee compensation into 1099-NEC.  Its convinience has caused confusion for students who receive an internship stipend.  The distinction between self-employed income and student internship stipends is not made apparent in the software.  Embedded in a list of six choices is a vague declaration that this is not earned income or self-employed income, but rather (uncommon) activities or hobbies.  You should add in this choice that it is a "student internship stipend."  This is not made clear enough so a person will choice "none of the above." This causes the software to trigger self-employment income development which denies the student the correct tax liability.  Intuit needs to correct his.

[Hal_Al]

For a work around, see:

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-1099-nec-graduate-student/01/...