Internship wages & expenses

Forum|Forum|4 years ago
March 16, 2022
2 replies
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My son had an internship which was required for his degree. He received a 1099-NEC. We claimed him as a dependent. I understand from previous posts here that his wages are considered taxable income but I'd like to clarify... Is this considered self-employment income? Can he deduct expenses incurred while working at his internship? If so, where do I input those expenses?

Thank you for your help!

Bsch4477

Level 15

It is self employed income reported on Sch C along with any expenses related to that income.

Opus 17

Level 15

That depends.

If the internship is required for his degree, and if he got course credit for the internship, then it is not self-employment. You can report the stipend in the education interview (as a stipend or grant in excess of tuition cost) or you can report it as miscellaneous other income, and it is not subject to self-employment tax. (Education is not subject to social security tax, and an internship for college credit is education, even though he probably performed work-like tasks.)

If he did not get credit for the internship, then it is treated as though he were self-employed (gig worker, independent contractor, etc.) and reported on schedule C. He would pay SE tax, but he could deduct ordinary and necessary employment expenses (if he had any); such expenses can't be deducted from the stipend if it is other income as a result of an educational requirement.