16 year old summer internship stipend on 1099-NEC

[Cat_Sushi]

First time I've gotten a 1099-NEC form. My son normally volunteers (not paid) all year for a science museum. During the summer, he applied to help a researcher as a part of a standard summer internship, where he helps to look through a report for a science organization and try to gather info to build a webapp. Mostly research exposure that doesn't end up in anything official from what I can tell. 

We didn't even know it was paid in anyway until we started, we just wanted the exposure to the experience. The check came from the science museum and not the organization he helped research with. It was positioned as a stipend to cover train/gas expenses, food or other expenses for the 6 weeks he participated in the program. It's a long standing program so it's not new either. Total around $1900, no fed taxes deducted on the form. 

Now that I'm trying to figure out what this form means, it sounds like he will need to pay self-employment taxes on this? I wasn't even planning to file a tax return for him since it's under $13K...but now seems I SHOULD file and now also have to pay taxes on top? 

How should I handle this? This would also be his first federal tax return if I do file. Also we are California residents...so does he need to file State as well? So confusing! 

[ReneV4]

Yes. Your son will need to file a return because he received a 1099-NEC that is over $400.

How to File in TurboTax:

1. Create a Separate Account. You cannot use your own account to file his return. You must create a new, separate account for him 
2. In the "My Info" section, be sure to check the box "Another taxpayer can claim me as a dependent on their tax return"
3. Go to Wages & Income
4. In the "Your income and expenses" category, scroll down to Self-Employment and click Start
5. Enter the 1099-NEC information

Note that he may deduct any expenses (e.g., supplies, equipment, uniform) to reduce his taxable income.

Because the amount does not exceed the standard deduction amount, he may not owe federal tax, but may owe self-employment tax.

[Cat_Sushi]

Great working on this one. In Schedule C, some questions by Line item.

Line B) It's asking for principle business code, does 712100 work for a museum? 

Line C) it's asking for the "Business name. If no separate business name, leave blank". Assume I should leave blank, put son's name or the company's name? As line D is also asking for EIN (which I do have for the museum). 

Line F) Accounting method, I assume Cash? 

Line G) Materially participate, I assume Yes?

Line H) I should skip since I don't plan to have startup costs?

So complicated! 

[LeticiaF1]

Here are the answers to your questions:

1. Line B- you mentioned he does research, I would suggest using code 541720 for research and development in the social sciences and humanities.  Code 712100 would be for the actual museum.  
2. Line C- leave the name blank
3. Line D- do not enter an EIN (this would be the EIN for your son)
4. Line F- select cash for the accounting method
5. Line G- Yes, he materially participated
6. Line H- yes skip the startup costs

Instructions for Schedule C

Reach out if you have any other questions.  

@Cat_Sushi 

[Cat_Sushi]

Thank you! And for the Business Address should I put my own address or the museums address, he went to work on group projects there half the time. Rest was at home. 

[ReneV4]

Yes. If you are referring to your son's business address, you can use your home address.

The payer's address (museum) is entered when completing the entries for Form 1099-NEC.

[Cat_Sushi]

I just filed the Federal through turbotax. I also ran it through the CA state tax. It says he owes $0 in taxes. Does he still need to send in a CA state return, or can we skip this year? 

[MonikaK1]

Whether he needs to file a California return for 2025 depends on his total income including any unearned income such as interest and investments. 

For the 2025 tax year, a California dependent must file a state return if they have unearned income (investments) over $1,350, earned income (wages) over $15,750, or a total gross income exceeding the larger of $1,350 or their earned income (up to $15,300) plus $450. A dependent's standard deduction is typically $5,706.

@Cat_Sushi 

[Cat_Sushi]

His only income is the $2000 from the internship 1099 NEC? 

[MonikaK1]

If his only income was from the 1099-NEC as you described, it is under the filing threshold for a dependent and he doesn't need to file for California.

See this Franchise Tax Board webpage for the filing threshold criteria. 

@Cat_Sushi