How to enter a 1099-MISC for a college summer internship in another state

[rajeanjean]

I am an undergrad college student, earning $3,000 from campus job during 2017.  An internship in another state, New Mexico, paid $6,000, but I am still below the amount for having to file a federal return.  No taxes were taken out of my internship income.  $131 taken out of my campus job earnings. I want to file federal return in order to get back $131.  When entering the 1099-MICS for $6,000, suddenly my return shows that I owe over $437. #1 - Is there a way to enter the 1099-MISC so I can get my $131 back and owe nothing? #2- Do I even have to enter the 1099-MISC??  #3- Will I have to pay state tax to New Mexico?

[MarilynG]

The IRS has copies of your 1099-Misc forms.  If you do decide to file a return, you should include them.

If the income on the 1099-Misc is reported in Box 7, 'Nonemployee Compensation' it appears you were a contract employee and would report the income as self-employment income.  You could be assessed Self Employment Tax (same as Social Security taken out of W-2 wages) which would go into your social security account.

When entering the 1099-Misc in TurboTax you are given the option to choose 'this work is unrelated to my regular job' and 'there was no intent to earn a profit'; however, the income would still be taxed as 'other income' and added to your W-2 wages, and you may still owe both Federal and State tax.

If you report it as self-employment income, there are many expenses you can claim related to this income that you may want to consider.  You can have a negative amount of self-employment income if your expenses exceed your income,  or you could have $0 income if your expenses equal your income.

Click the link for some good tips for self-employment you may find helpful.

[rajeanjean]

What if the income is reported in Box 3?  It was a stipend for a college summer internship.

[MarilynG]

This will be reported as Other Income in your Federal and State returns.  If no taxes were withheld, you may owe tax to the IRS and your home state.  You may qualify for an Earned Income Credit, though.  You won't have to file NM though; just your home state.

[Dennis 2000]

The issue is whether or not the internship stipend reported in box 3 of a 1099-Misc is EARNED? If not, and you are claiming your child student on your tax return, Turbo tax only gives the student am $1,100 standard deduction...MUCH LESS than if he/she were reporting it as earned income (in this case, the student made $7,300).

 So - should money from a student internship be considered EARNED? If I say no - this student owes $623 Federal tax. IF I say yes, he owes $0!!

[esmevancampen]

So when it walks me through all this self-employment stuff.. am i claiming myself as a business? I'm so confused by all of this its asking me when it was first established.

[cwmc]

Dennis, I have the EXACT same issue. I believe it should be reported as earned income, but I'm unable to find a way to report it as such. Were you able to find a way to report the 1099-MISC form under earned income?

[ErnieS0]

@Dennis 2000 and @cwmc Stipends are "taxable income" but not "earned income."

ITG FAQ #2 Answer-What income is considered earned income?

What is a Stipend: Everything You Need to Know