1099-Misc for internship stipend

Forum|Forum|4 years ago
April 11, 2022
2 replies
115 views

I have a 1099-misc form with box 3 filled out. I am a college student and this stipend was for work done in an internship (but the internship was done outside of school). Where am I supposed to add this form? When I try adding it, it taxes me for social security and medicare, which I don't think is supposed to happen. Or it gets the kiddie tax, which I thought was only for unearned income.

TurboTax Deluxe Online

PattiF

Level 15

In TurboTax Online:

Go to Other Common Income in the Income & Expenses section,
Click Start at the 1099-MISC box
Enter info from 1099-MISC,
Describe the reason for this 1099-MISC, and Continue
Does one of these uncommon situations apply?, Choose None of these apply and Continue
Check that No, it didn't involve work like my main job
How often did you get income for internship stipend, Choose I got it in 2021 and Continue
Did the internship stipend pay involve an intent to earn money, Choose, No, it didn't …. And Continue

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sam2022_Author

Level 2

This makes it subject to the kiddie tax. Is that supposed to happen? Is a stipend considered unearned income, even if I received it after doing work for an internship?

JamesG1

Level 15

IRS Form 8615 Instructions page 1 states:

Unearned Income

For IRS Form 8615, “unearned income” includes all taxable income other than earned income. Unearned income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, etc. It also includes taxable social security benefits, pension and annuity income, taxable scholarship and fellowship grants not reported on Form W-2, unemployment compensation, alimony, and income (other than earned income) received as the beneficiary of a trust.

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AmyC

Level 15

To make the 1099-MISC income earned income there are two ways.

Option 1: enter it in the education section as a scholarship and claim it was used for room and board. Follow these steps:

Open to Federal Deductions & Credits.
Scroll to Education
Start/Revisit next to Expenses and Scholarships (Form 1098-T).
Answer No to "Did you receive a 1098-T?" (unless you have one for tuition).
When asked if you "qualified for an exception," answer Yes.
Continue through the interview until you reach the screen: Did you receive a scholarship or grant in 2025?
Enter the amount in the box for Other Scholarships/Grants/Fellowships.
When asked if any was used for "Room and Board," answer Yes and enter the full amount.

Option 2: enter it as 1099-MISC income under Other Income. Follow these steps:

Open to federal income
Locate Other income
Select 1099-MISC
Enter your information
You have to mark:

no intent to earn money
mark that the income is only for this tax year. Otherwise the program will think it is recurring income and a business.
mark no to like main job

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Jakeado

Level 2

Thanks but there is a 1098 for actual (unrelated) scholarships and this wasn't work that occurred at a university so doesn't truly fir the definition of a scholarship. Secondly, the second way puts it in as unearned income, which then triggers the "kiddie tax" and lowers the standard deduction (for dependents) that also makes more tax due than there should be (income doesn't even fit the threshold for filing).

After extensive research and calling Turbo Tax, it was decided the best way to do it is to put it under less common income, Misc Income and then unreported earned income which then goes to line 1h on the 1040;. income is still taxable, but as earned income.

Do you disagree?