1099-Misc for internship stipend

[sam2022_]

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.

[PattiF]

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

[sam2022_]

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]

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.

[snjrrrr]

I have the same question but with the following differences:

- I am a phd/ graduate student, not an a undergraduate student like the original commenter.

- I received a stipend to do research at another university in a different state over the summer as part of a grant funded exchange program. However, I was an intern, not a student or W2 employee of the out of state university. The university received grant money to pay me, but I didn't receive it directly. They sent me a 1099-MISC form for the stipend. 

question: Should I still select that the internship was not an attempt to earn income and that it is not similar to my other work?

[KrisD15]

Yes, you should still select that response since you are not really doing "work" or a side job, and you should not need to pay self-employment tax on a stipend or grant. 

One of the reasons the IRS resurrected Form 1099-NEC is to distinguish Self-Employment income (1099-NEC Non-Employee Compensation) which IS subject to Self-Employment (FICA) tax from everything else  reported on Form 1099-MISC. 

The IRS does not address this directly however;

Pub 970

“ certain non-tuition fellowship and stipend payments not reported to you on Form W-2 are treated as taxable compensation “…..

“These include amounts paid to you to aid you in the pursuit of graduate or postdoctoral study and included in your gross income under the rules discussed in this chapter. Taxable amounts not reported to you on Form W-2 are generally included in gross income as discussed later under Reporting Scholarships and Fellowship Grants.”…

“ Include any taxable amount not reported to you in box 1 of Form W-2 on Schedule 1 (Form 1040), line 8r.”

Schedule 1 line 8r is "Other Income" and not treated as Self-Employment. 

To get the income from the 1099-MISC to this line on your tax return, answer no to being like your work. 

[snjrrrr]

Thank you so much for this info!

Follow- up question: I live in a state without income tax, but since this stipend was for a 3 month internship in another state (HI), do I need to report it on a HI state tax return? If yes, as what kind of income in that context? thank you.

[PatriciaV]

Yes, you will need to report this income on a Hawaii State income tax return. Hawaii taxes all income earned within the State of Hawaii. Indicate that you had income in another state and TurboTax will help you complete the state tax return.

Did you live in Hawaii for more than 200 days during the internship? If so, you are considered a part-year resident of Hawaii. Otherwise, you are a non-resident. Either way, you will need to file Hawaii Form N-15 for nonresident individuals or individuals who are Hawaii residents for only part of the tax year. 

[dsw1234tax]

Similar situation with 1099-MISC stipend income for an internship. A portion of the stipend was to cover travel expenses. Does that impact the taxes due in any way?

[MonikaK1]

No, the funds are still taxable, similar to scholarship income that covers unqualified expenses such as travel, room, and board as distinguished from nontaxable scholarships that cover tuition.

If travel expenses are reimbursed following an accountable plan, such as many employers set up, then the reimbursement would not be taxable.

See IRS Topic 421 for more information.