Internship 1099-NEC SE Tax

[p_szarecki]

Hi Everyone,

I was working as an intern last summer and have received 1099-NEC at the end of it. It is important to note that the invoice I have submitted to the company states it was for "internship stipend" and that I was not paid for a specific service, rather it was for the compensation of my time and other expenses.

How would I file this in a way to not pay self employment tax on it? How do I do it within TurboTax?

[Hal_Al]

Q. How would I file this in a way to not pay self employment tax on it? 

A. You don't.  The IRS considers anything on a form 1099-NEC to be self employment income. You had a job and your compensation is subject to social security and medicare tax (FICA tax).  Self employment tax (SET) is how contract employees  pay their SS & medicare tax.  Since your "employer" didn't  treat you as a regular (W-2) employee and withhold FICA, you now have to pay it. 

Reference: https://pocketsense.com/tax-rules-for-student-interns-13660982.html

There is a way to contest the “employer’s” classification of you as a contract employee. That is to pay your share of the Social security tax on form 8919 .In TurboTax, after you enter your 1099-NEC, select  "My employer reported this extra money on a 1099-NEC but it should have been reported on a W-2" from the drop down list at the  "Does one of these uncommon situations apply" screen.

You also have to submit form SS-8 and the IRS will determine whether you or the employer pays the employer portion of the SS tax. You will probably also upset your employer, because the IRS may contact him about whether or not he properly paid wages.

Form SS-8 is not in TT but is here ===>>> http://www.irs.gov/pub/irs-pdf/fss8.pdf
See this IRS site ===>>> http://www.irs.gov/taxtopics/tc762.html

[Vanessa A]

Internship stipends are included on your return as other income instead of self-employed income. To enter your income from a internship stipend click the following:

• Federal
• Income and Expenses
• Scroll down to Less Common Income and click Show More
• Start next to Miscellaneous Income
• Start next to Other Reportable Income

This will put it on line 8z of your schedule 1 as other income.