1099-NEC for a Minor for an Internship

[thetomkat]

I'm filing a return for my daughter who is a minor in high school. She received a 1099-NEC for $2225. It seems the 1099-NEC automatically produces a Schedule C and classifies her as self-employed, but that is not the case, as she received the money for an internship. Is it required that she has to file under this category with a schedule C as a sole proprieter and pay self-employment tax, or is there another way, which doesn't seem to be the case? And what principal business code do I enter for an environmenal/nature intership?

[NCperson]

@thetomkat it is correct.  She performed "work" and owes the self employment tax(social security and medicare tax).  had she been paid with a W-2, the same thing would have occured, but the social security tax and the medicare tax would have been withhold from her paycheck. 

just do the best you can on the business code.  it's not really going to matter. 

[thetomkat]

My next question is, a Schedule C is the only way to file? In reality, my daughter is a minor and not self-employed, as the money she was paid was more of a stipend for an internship. It doesn't seem right that she should pay self-employment tax??

[NCperson]

@thetomkatbeing a minor doesn't matter (think child actors or models).  If you earn more than $400 as a self-employed individual you are required to pay SE tax.  

But think how this works.  If she was a W-2 employee and made that same money, we would not be having this debate because the social security tax and medicare tax would have been withheld from her paycheck and there would be no income tax form to complete and no additional tax to pay.  

But for self-employed, there is no paycheck withholdings of social security and medicare, so it gets collected on the tax return.  it's the same money just collected differently. 

Let's turn this around.  It's a good example and life lesson to set for your child that there is a tax system in this country.  That we all pay in to a retirement fund (social security) and medical fund (Medicare).