INTERNSHIP WAGES

[FranMTaylor]

My son had an internship through his college which is required for his degree.  He received a 1099-NEC.  In Turbotax Help in indicated that these wages were not subject to self-employment tax.  I need assistance on how to enter the 1099-NEC wages where Turbotax will not consider the wages taxable.  I am claiming him on my tax return as a dependent.  I know he has to file a return for these wages, but need help to key into Turbotax so his return does not reflect self-employment tax.

[ColeenD3]

Please see this answer from GeoffreyG.

The stipend you received for an internship is indeed considered taxable income.  As such, you do (legally) need to declare it and report it on your tax return.

This can be accomplished in the TurboTax program, both in the online (web-based) software as well as in the desktop versions of the program.

The mechanical steps to do so are outlined at the following AnswerXchange post from a few years ago: stipend

Those general processes remain accurate for the current (2016) tax year of the TurboTax program (i.e., either of those described will work just the same).The notation "SCH" will appear on Line 1 of Form 1040. The good news is that, although your stipend income is taxable as ordinary income, at least you do not have to pay Social Security and Medicare taxes on it, as you would if the income were alternatively taxed as ordinary W-2 wages.

[FranMTaylor]

I know the wages are taxable, but how do I input into Turbotax to NOT be subject to Self-employment tax?

[Hal_Al]

After entering your 1099-NEC, you will encounter a screen titled "Does one of these uncommon situations apply".  Check the box "This is not money earned as an employee or self employed individual; it is from sporadic activity or hobby".

The IRS considers anything on a 1099-NEC to be self employment income. TurboTax (TT) aggressively steers you in that direction, even if the amount is on a 1099-Misc. If you try reporting 1099-NEC income as anything else, you chances of hearing from the IRS are  higher.

What does "internship through his college" mean? Depending on the details, there are three different ways the income should be reported:

1. If he worked for the school, it could be reported as taxable Scholarship (stipend). ColeenD3's answer link shows you how to enter. For more details, see https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-1099-nec-graduate-student/01/...

2. If it's a one time gig, it can be entered as other income, and entered in TT, as I described above. 

3. If he worked for an outside (not part of the college) company/employer training in his regular/anticipated line of work, it probably should be reported as self employment and self employment tax paid.  

[FranMTaylor]

I checked the box "This is not money earned as an employee or self employed individual: it is from sporadic activity or hobby."  TT still subjects the earnings to self-employment tax.  It creates a Schedule C and a SE Form.  TT help states that a Schedule C and SE Form should NOT be created.  Still not sure how to key 1099-NEC into TT to get the SE tax to zero.

[AmyC]

You can enter it as other income. Follow these steps:

1. Log into your return
2. Federal
3. Click on Income
4. Scroll to the bottom section, Less Common Income
5. Select Miscellaneous income, 1099-A, 1099-C, start
6. Select Other Income
7. Did you receive other wages? Yes
8. Continue
9. Household employee? Continue
10. Sick or disability pay? Continue
11. Any other earned income or wages? Yes
12. Enter source of Other Earned Income
13. Select Other
14. Continue
15. Enter description Internship on 1099NEC
16. Enter amount

The IRS may not like this since NEC and sch C go together. If they send you a letter, simply explain to them this was not a business but a requirement of graduating. The NEC is new this year and everyone is adjusting.

[Hal_Al]

@FranMTaylor  said " TT still subjects the earnings to self-employment tax.  It creates a Schedule C and a SE Form. " 

I can't duplicate that on my Desktop Deluxe TT.  

Try deleting the 1099-NEC and re-entering.  Check only the box "This is not money earned as an employee or self employed individual; it is from sporadic activity or hobby".

[anafer99]

I received a 1099 NEC for $1,025  from a required church internship for my thealogical ministry degree. I was told I could put this under other income and put in this was for a required internship on a 1099 NEC is this true?

If not how do I file this amount without being self employed?

I never signed a contract with the church and I used the money towards tuition.

[Hal_Al]

Q.   I was told I could put this under other income and put in this was for a required internship on a 1099 NEC is this true?

A. Maybe, but probably not. See above.  From the  info you provided, #3 appears to apply (If you worked for an outside (not part of the college) employer training in your regular/anticipated line of work, it probably should be reported as self employment and self employment tax paid).  

Q. IF not how do I file this amount without being self employed?

A. After entering your 1099-NEC, you will encounter a screen titled "Does one of these uncommon situations apply".  Check the box "This is not money earned as an employee or self employed individual; it is from sporadic activity or hobby".