topic INTERNSHIP WAGES in Education

INTERNSHIP WAGES

FranMTaylor — Sun, 16 May 2021 01:18:32 GMT

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.

Re: INTERNSHIP WAGES

ColeenD3 — Sun, 16 May 2021 01:37:46 GMT

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.

Re: INTERNSHIP WAGES

FranMTaylor — Sun, 16 May 2021 01:59:16 GMT

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

Re: INTERNSHIP WAGES

Hal_Al — Sun, 16 May 2021 10:53:45 GMT

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/01/2264008/highlight/false#M211285

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.

Re: INTERNSHIP WAGES

FranMTaylor — Sun, 16 May 2021 19:39:30 GMT

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.

Re: INTERNSHIP WAGES

AmyC — Sun, 16 May 2021 23:38:30 GMT

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

Log into your return
Federal
Click on Income
Scroll to the bottom section, Less Common Income
Select Miscellaneous income, 1099-A, 1099-C, start
Select Other Income
Did you receive other wages? Yes
Continue
Household employee? Continue
Sick or disability pay? Continue
Any other earned income or wages? Yes
Enter source of Other Earned Income
Select Other
Continue
Enter description Internship on 1099NEC
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.

Re: INTERNSHIP WAGES

Hal_Al — Sun, 16 May 2021 23:52:56 GMT

@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".

Re: INTERNSHIP WAGES

anafer99 — Thu, 16 Jun 2022 16:55:17 GMT

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.

Re: INTERNSHIP WAGES

Hal_Al — Thu, 16 Jun 2022 19:29:14 GMT

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".