<p>My daughter made around 1000 working last year at a regular job which was paid by her University and 800.00 over the summer for an internship at her college. They sent a 1099 misc for that. She wasn't going to file but am I correct that if you have over 500.00 on 1099 misc, you have too? She is speaking to someone later this week, but I was curious.</p>
<p>Is it the norm to receive 1099 misc for internships? She was under the impression she would get a regular W2?</p>
<p>I think this was probably classified as a stipend and not regular wages. Colleges can elect to treat certain types of payments as non-employee compensation. I think the limit for the IRS filing requirement is $400, but she’s definitely required to file.</p>
<p>She doesn’t need to file. The 1099MISC can be put on line 7 as a Stipend or Grant, not as a contractor. Which means her income is below the filing requirement and not SS is due on it.</p>
<p>I don’t think that’s correct, 3bm103, because her earnings were not classified/reported as wages. Perhaps line 21 would work…I would check Pub 525 for guidance on that. It sounds as if the school did not deduct/pay Social Security and Medicare on the earnings, so I believe that she is supposed to file a 1040 and 8819 and pay those taxes even though she’d have no income tax liability.</p>
<p>They didn’t take anything out of her check, just line 7 on the form was filled in. Even her W2 for her regular wages didn’t have any fed tax taken out, only some state. </p>
<p>I’ve heard she has too, but it didn’t seem right that she would be considered a “private contractor”. The IRS was a little confused (well the first in line anyway) and she wanted to transfer us to the “small business dept” but there was an hour wait at 9:30 at night.
My daughter said she’d check into it later in the week and next time would ask more questions first. On a free tax site through the IRS, doing her taxes, none of the options she said fit, with the misc form, she didn’t have a business, winnings, internship wasn’t there or anything like it. They wanted her to check something, but nothing really fit.</p>
<p>It’s not a problem that fed and state income tax witholding weren’t made…no deductions for Social Security and Medicare would be the issue. Did you check Pub 525? I’m pretty sure I’ve seen treatment of fellowships, etc. in there and that may be a closer match for what you’re looking for. Regardless of whether she fits the traditional role of “contractor”, if she received the payment in return for services, I’m pretty sure the FICA applies.</p>
<p>After skimming through the “bribes”, “kickback” and illegal drug trade listings (you have to laugh) I found this:</p>
<p>"Scholarships and fellowships. A candidate for a degree can exclude amounts received as a qualified scholarship or fellowship. A qualified scholarship or fellowship is any amount you receive that is for:
Tuition and fees to enroll at or attend an educational institution, or</p>
<p>Fees, books, supplies, and equipment required for courses at the educational institution.</p>
<p>Amounts used for room and board do not qualify for the exclusion. See Publication 970 for more information on qualified scholarships and fellowship grants. </p>
<p>Payment for services. Generally, you must include in income the part of any scholarship or fellowship that represents payment for past, present, or future teaching, research, or other services. This applies even if all candidates for a degree must perform the services to receive the degree. </p>
<p>Do not include in income the part of any scholarship or fellowship representing payment for teaching, research, or other services if you receive the amount under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance program. "</p>
<p>I don’t think she fits the fellowship really, but maybe nothing would. She was helping a masters student that needed help with his project and although it was the summer before college, they paid her it seems like they would him.</p>
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<p>I think that is the relevant portion that I was thinking of. I’m guessing she wasn’t paid through the two specific exceptions listed as you would know about that! But, did they say where to report that income for taxes? I was thinking it was “other income”, line 21…arggh I’m afraid I can’t locate my kid’s tax form that was professionally prepared and had a similar payment several years ago. But I do remember writing a check for taxes and am pretty sure it was for FICA/Medicare. If you’re using a tax program, you might plug it in on line 21 and see where that takes you.</p>
<p>Debruns, I found this short article which discusses payment for services (which is what I think your D has earned) which may be helpful to you:</p>
<p>[FinAid</a> | Scholarships | Taxability of Scholarships](<a href=“Your Guide for College Financial Aid - Finaid”>Taxability of Scholarships - Finaid)</p>
<p>It suggest that the IRS is cracking down on schools (or was at some point) that were not treating this as employee compensation and making the mandatory witholdings/contributions. It seems like you can put it on line 7, as 3bm suggested, but attach a letter explaining what it is for. In your D’s case, since her income is so low, that may get you out of filing entirely…I’d be tempted to treat it that way in the absence of any other clear guidance on the issue! We did not have that choice as my S had to file anyway.</p>
<p>Yes it is confusing, when she looked at line 7, nothing really fit but she ended up putting “other income” and writing in “internship”. It said on Turbo Tax (not finished yet) she owes 51.00. If she said she planned on doing it again, they considered it a job, not again, “other income”.
I don’t know if the end result is any different, that is what we’ll have to look at, can she ignore it or just pay the 51.00 and be done with it.</p>
<p>It’s not the money, more just understanding for the future, what it means.
Thanks for the link, I’ll read it now.</p>
<p>my son got a 1099 for $957 for his fall internship. I didn’t see this coming as the money he received was meant for transportation and food costs. It was $15/day. As he had other jobs in 2010 with total income of about $8500 he has to file taxes and I really want to be able to write off most of this of expenses and not end up paying federal/ss/state taxes on this!</p>