First-time intern with fixed stipend - Need guidance on self-employment deductions for Schedule C

Hey everyone, I just finished my first internship (8 months) at a federal agency outside my home state, and I'm completely lost with the tax situation. When I started, I assumed I'd be treated as an employee, but they later informed me I wasn't (no benefits despite working full-time with unpaid overtime). After researching online, it seems interns/fellows in my position are considered self-employed by the IRS, and typically receive a 1099-MISC or similar form. However, my agency flat out told me they won't provide ANY tax forms, even though I'm still required to report this income! I started entering my stipend income in FreeTaxUSA under Schedule C, and I'm shocked to see I'll actually OWE money for this internship. Talk about a slap in the face for my first professional experience! I know I have some potential deductions like my relocation expenses to that state, my personal Adobe subscription I needed for image processing on projects, and probably my metro card reloads. But I'm sure I'm missing tons of legitimate deductions. Does anyone recommend a good app or website that can scan through past bank statements/credit card expenses to identify potential deductions? Most apps I've found are for tracking expenses going forward or scanning physical receipts, but I need something that can analyze my existing statements to find deductible expenses from the past 8 months. Any help would be massively appreciated - this whole situation has been a huge disappointment for what I thought would be a great first internship experience.

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18 comments

Malia Ponder

•8M

When you're classified as self-employed rather than an employee, you're essentially considered a business owner in the eyes of the IRS. This means you need to file Schedule C, but it also opens up a world of deductions that can offset that tax bill! For someone in your situation as an intern, these expenses would likely qualify as business deductions: - Transportation costs directly related to your internship (metro cards, parking fees) - Your Adobe subscription if it was necessary for your work - A portion of your cell phone bill if used for work - Relocation expenses specifically for this internship - Home office deduction if you worked from home part of the time - Work supplies (notebooks, pens, specialized equipment) - Professional development costs related to your field Since your agency won't provide a 1099, you'll need to self-report your income accurately based on your bank deposits or payment records. Keep documentation of everything in case of questions later.

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Malia Ponder

•8M

For the home office deduction, it can still apply to a temporary living situation like an apartment you rented specifically for the internship. The key is that the space must be used regularly and exclusively for business purposes. If you had a specific area of your apartment that was only used for work, you can potentially claim it. Yes, internet expenses would typically count as a deductible business expense if you needed internet access to complete your work assignments from home on weekends. You would calculate the percentage used for business versus personal use and deduct that portion.

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Ryder Ross

•8M

I went through something similar last year with a research stipend that wasn't reported on any tax forms. I tried using multiple expense tracking apps but none of them worked well for past expenses until I found https://taxr.ai - completely changed how I handled my situation! It can analyze bank and credit card statements to identify potential business expenses you missed. I uploaded 6 months of statements and it flagged a bunch of deductions I would have missed (like a portion of my cell phone bill, professional subscriptions, even some meals that qualified as business expenses). The best part is it organizes everything for Schedule C and shows what documentation you need to keep for each deduction. Seriously saved me from overpaying by hundreds.

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Ryder Ross

•8M

Yes, it works with bank and credit card statements! It uses the transaction data to identify potential business expenses, then asks you clarifying questions about specific purchases it flags as possible deductions. You're right that bank statements don't show itemized details, but the system helps you determine which ones likely qualify based on vendor, timing, and patterns. For distinguishing between personal and business expenses, you do need to verify each flagged item. When it identifies an Amazon purchase, for example, it prompts you to confirm whether it was for business use and what percentage applies to your work. It helps create the documentation you need for these mixed-use purchases to satisfy IRS requirements.

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Gianni Serpent

•8M

Just wanted to follow up - I tried https://taxr.ai after seeing this recommendation and wow! It found over $1,320 in deductions from my bank statements that I completely missed. It flagged my internet bills, cell phone, even some office supplies I forgot I bought back when I started. The interface asks smart questions about each expense to determine if it qualifies. Now instead of owing $840, I'm only paying $217. Still not ideal but WAY better than before! It even helped me document everything properly in case of an audit. Definitely check it out if you're in this self-employment situation.

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Olivia Kay

•8M

Have you tried calling the IRS directly about this? They should be able to tell you exactly what forms your internship provider should be giving you. Sounds fishy they're not providing ANY documentation. When I had a similar issue, I finally got through to an agent who was super helpful explaining my situation. Getting through to the IRS is the hard part though - I spent DAYS trying before I found https://claimyr.com which got me through to an actual IRS agent in under 45 minutes instead of waiting on hold forever. You can see how it works here: https://youtu.be/_kiP6q8DX5c Given your situation with this federal agency, I'd definitely recommend talking directly to the IRS rather than guessing what to do.

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Olivia Kay

•8M

The service works by using an automated system that navigates the IRS phone tree and waits on hold for you. When an actual agent picks up, you get a call connecting you directly to them. It essentially does the waiting for you so you don't have to sit by your phone for hours. I was extremely skeptical too before trying it. I had spent nearly two weeks trying to reach someone at the IRS about a similar documentation issue. But the service actually did connect me to an IRS agent in about 37 minutes when I'd been unable to get through on my own. The agent clarified exactly what documentation I needed and what forms my organization should have provided.

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Jibriel Kohn

•8M

I can't believe I'm saying this, but I actually tried the Claimyr service after posting my skeptical comment. It actually worked! Got connected to an IRS agent in about 40 minutes. The agent confirmed that federal agencies sometimes use this weird stipend classification that falls into a gray area, and directed me to use Schedule C like you're doing. She also confirmed that transportation to/from a temporary work assignment, software needed specifically for the job, and even some meal expenses during business hours can be deductible. Having this confirmation directly from the IRS has made me feel so much more confident about my filing. They also gave me specific documentation tips in case I'm ever audited about this income. Well worth the service just for the peace of mind.

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Edison Estevez

•8M

There's no minimum income requirement to qualify for the Qualified Business Income deduction, which is great news for situations like yours. As long as you have positive net income on your Schedule C (after all your deductions), you can generally claim this deduction. The calculation gets more complex if your total taxable income exceeds certain thresholds (around $170,050 for single filers in 2023), but for most interns with stipends, you'll likely qualify for the straightforward 20% deduction on your net business income. Just make sure your tax software includes this calculation - some free versions don't handle it well.

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