My dependent son earned less than $1000 in 2018, but received a stipend of $5750 from his college for a summer internship. Does he need to file a tax return?

[dal16]

I am not eligible for any credits.

[Carl]

Generally, if the total reportable income is less than $12K for the entire tax year, then no tax return needs to be filed. However, if that stipend was reported on a 1099-MISC and was more than $400, a tax return "should" be filed so the IRS doesn't assume it's self-employment income.
With self-employment income, if you made more than $400 in the tax year, then you are "required" to file a return and report it, since you have to pay self-employment taxes on any amount that exceeds $400.

[dal16]

Very helpful.  Turbo Tax does not appear to allow me override the 1099-Misc self-employment designation and is showing a tax due amount due to the stipend.  Any ideas?

[Critter]

what box is the income in on the 1099-misc ?    And where did the other $1000 of income come from ?  Wages ?  Bank interest ?

[dal16]

Box 7.  Mostly wages.  Some dividends

[Carl]

If box 7, then the IRS automatically considers that self-employment income. The below entry instructions apply. But you can expect to have to prove it was not self-employment income when the IRS questions it 24-36 months after it's filed. So keep all your paperwork concerning the stipend, and this will just be an inconvenience when you get that letter from the IRS, instead of a problem.

[dal16]

You guys are great!

[dal16]

I fear Turbo tax will not allow me to override the "self-employment" designation, and so I continue to show a tax due amount due to the stipend.    However, i am wondering whether the stipend does in fact constitute a taxable event, regardless of any other circumstance such as all other earnings falling below the threshold for filing or taxes due.  So, like it or not, my son is required to pay taxes on the stipend?  Thoughts?

[Carl]

If the stipend was not used to pay "qualified" education expenses in the same tax year it was received, then it's taxable income. Period. By entering it as I outlined below, you *will* be taxed on the money. But you will *Not* be assessed the "additional" 15.3% self-employment tax.

[Carl]

First, delete the 1099-MISC you already started. I don't know which of the three possible places you entered it, but to delete it basically go back into it and indicate that "yes" you do have a 1099-MISC to enter. Then you will see the already partially entered 1099-MISC listed there with a delete button next to it. Click delete, then YEs to confirm the delete and that gets rid of it.

Now to enter it correctly, assuming the income is reported in box 3.

Reporting 1099-MISC (box 3) that is not self-employment income

Under the Wages & Income tab (or Personal Income tab) scroll down to Other Common Income and elect to start/update Income from form 1099-MISC. Then click YES to indicate you have a 1099-MISC.

Enter the 1099-MISC exactly as printed, and then Continue.

Enter the reason you got this money – be it scholarship, bonus, streaking butt naked across the 50 yard line of the super bowl, whatever. Then continue.

Select None of these apply, then Continue.

Select No, it didn’t involve work….. and Continue.

Select ONLY the tax year for which this specific 1099-MISC was issued. Do not select the year that you received the 1099. Select the year for which the 1099-MISC was issued. Select no other year. Then Continue.

Select No, it didn’t involve an intent to earn money, then Continue.

Select NO, then Continue.

Click the DONE button, and that does it.

[dpg122997]

I followed these steps for a similar situation... is it odd that now taxes were applied?