How to report Student Research Internship Stipend

[paulharv66]

My son did a "Research Experience for Undergraduates" internship at Binghamton University last summer.

He got a 1099-MISC with the $5,500 stipend reported in box 3 "Other Income."

He's using TurboTax Free Edition and we cannot figure out how to report the stipend in such a way that he doesn't end up owing $600+ dollars of federal tax!

1. Is the huge bill because of self-employment tax?
2. A stipend for student research should not be treated as self-employment income, right?
3. Is there a way to enter this income so it doesn't incur self employment tax?

Thanks

[MarilynG1]

If the stipend amount is reported in Box 3 of the 1099-Misc, it is not considered Self-Employment Income; however, it is still taxable as 'Other Income' unless Education Expenses are claimed against the income.

Click this link for more info on Taxable Scholarship Income. 

[paulharv66]

Thank you! Follow on question...since his total income from college job and the stipend was less than $7,000, does he even need to file?

[MarilynG1]

No, he is not required to file with Earned Income less than $12,200.

[paulharv66]

Does it matter that I am claiming as him as a dependent? 

[MarilynG1]

No, if you consider his 1099-Misc income as Earned Income.  Click this link for more info on Filing Requirements for Dependents.

[Nancybrewer]

Hi. My daughter is having almost exactly the same problem this year, but Turbo Tax keeps trying to treat this as a "business income" entry so she gets a Schedule C and required entry for business code and business name, etc. Like Paul last year, is she just better off not filing taxes since her total income was under $12,000? The frustration level with TT is nuts!

[ColeenD3]

If her income is under $12,550 and she is not a dependent*, she is not required to file. However, if she has withholding, she would wish to get that back. If this is her only income and it's reported on a 1099-MISC, she need not file.

*Single dependents— You must file a return if any of the following apply.

1. Your unearned income was more than $1,100.

2. Your earned income was more than $12,550.

3. Your gross income was more than the larger of— a. $1,100, or b. Your earned income (up to $12,200) plus $350.