topic Re: Internship stipend in Get your taxes done using TurboTax

Internship stipend

thomas_callahan — Mon, 16 Feb 2026 23:06:34 GMT

My child got a small stipend (grant?) from her college to enable her to do an unpaid summer internship. It's through a program funded by the school so that their students can do afford to do unpaid internships who otherwise would need the income from a paid summer job. There were requirements around the types of internships she was allowed to do, she had to get approval first and give a presentation write a paper on her experience afterwards.

She also has a small amount (few hundred $) of W2 income from the school. She does get grants from the school for tuition, too, but is not doing work study or anything, this extra income is just regular W2 income not not related to any financial aid. No federal taxes were withheld from that (SS and Medicare were).

Her total income from both sources was less than 1/3 of the current filing requirement. She is claimed as a dependent on my taxes. I'm helping her do her own taxes.

The school provided a W2 for the other work, but what they say about the internship money is that "it should be reported to the IRS as income, but we are not obligated to nor will we provide any documentation or tax advice".

I cannot find anywhere in TurboTax to put this, other than as self-employment income with no documentation which triggers self-employment tax and requires upgrading to a paid version of TurboTax. This doesn't feel like "self-employment" income to me.

I can understand the self-employment tax I guess, as nothing was withheld from this stipend at all, but it seems ridiculous that someone earning this small an amount of money should have to switch to the paid products because of this. Am I doing something wrong here? Is this supposed to be reported somewhere else that wouldn't trigger the need to upgrade (and preferably not self-employment tax either)? Is the school's vague statement hinting that this doesn't actually have to be reported?

If it truly is self-employment income then she has to file, but if not since she's well under the filing requirement should she just not file at all this year and avoid this issue altogether?

Re: Internship stipend

ReneV4 — Tue, 17 Feb 2026 00:36:49 GMT

No. You should not report this a self-employment income because it is not.

If her total earnings were under the threshold of $15,750, she does not have to file, so that may be an option.

However, it may be beneficial for her to file, even if under that amount, for a potential refund, and to create a tax record. Therefore, here is another option to consider.

Instead, she can input this as a taxable scholarship by doing the following:

Go to Deductions & Credits in the Federal section
Select Education and click the drop-down arrow
Select Expenses and Scholarships (Form 1098-T)
"Did _ have any of these common situations in 2025?", select Received a scholarship, frant or other aid, Continue
"Did_ get a 1098-T?", select No, then Continue
Select "_qualifies for an exception", then Continue
Enter the school info, leaving the payments for tuition blank, then Continue past the school info until you reach, Add any other financial aid
Enter the amount of the funds received in the Other scholarships, grants, or fellowships box, Continue
Check the "_ used it to pay for room and board" box when you reach, "Did _ have any of these situations for their scholarship or grant?"
Enter the amount received as the amount used for room and board, then Continue

Following these steps ensures the stipend is correctly reported as taxable scholarship income used for room and board, which are considered non-qualified expenses. This will satisfy the IRS requirement to include it in earned income without incorrectly triggering self-employment tax.

Re: Internship stipend

thomas_callahan — Sat, 21 Feb 2026 18:52:24 GMT

Thanks, that worked and her tax due is now $0. TurboTax is, however, still charging for Federal and two state returns, is that correct? Does this "income" make this a not-simple tax return? Or is TurboTax stuck on the paid option because I had non-W2 income in there at some point, even though that has now been removed.

She has no refund and does not owe anything to any of the three agencies, so I'm leaning towards just not filing at all if it's going to cost $130+. For my own taxes with multiple jobs, home ownership, etc., fine, but not for hers.

Re: Internship stipend

DianeW777 — Sun, 22 Feb 2026 00:30:44 GMT

The filing requirement for dependents is shown below. If she does not meet the filing requirements then you are not required to file your daughter's tax return. It's important to know it it's required.

A person who is a dependent may still have to file a return. It depends on the person’s earned income, unearned income, and gross income.

Single dependents—Were you either age 65 or older or blind?
- No. You must file a return if any of the following apply.
  - Your unearned income was more than $1,350.
  - Your earned income was more than $15,750.
  - Your gross income was more than the larger of:
  - $1,350, or
  - Your earned income (up to $15,300) plus $450.

NOTE: State returns have different filing requirements be sure to use the link below to find your state's filing requirement for dependents.

Do I need to file a state return?

@thomas_callahan