Getting 1099-MISC for college internship - is this self-employment tax?
Title: Getting 1099-MISC for college internship - is this self-employment tax? 1 Hey everyone! My son just finished his second year of college and did an internship over the summer break. The company sent him a 1099-MISC for the work instead of a W-2. His total income for the year was only around $8,900, so I figured he wouldn't owe much in federal taxes. But when I started entering this into FreeTaxUSA, it's saying he owes $782! It looks like the system is treating him as self-employed and asking for Schedule C information. I'm completely confused - he was just an intern, not running a business! Did I mess something up on the tax form or is this actually correct? Any help would be super appreciated!
18 comments
Join the conversation
Jade Santiago
8 The issue is that income reported on a 1099-MISC is considered self-employment income, which is subject to self-employment tax (SE tax) even at lower income levels. SE tax is about 15.3% and covers Social Security and Medicare contributions - similar to what would be withheld by an employer on a W-2, except you pay both the employee and employer portions. Even though your son might not owe income tax due to his low total earnings, he'll still be responsible for SE tax if his net self-employment income is $400 or more. That's why TurboTax is prompting for Schedule C - it's for reporting business/self-employment income and expenses.
0 coins
Jade Santiago
•12 Wait so does that mean the company classified him incorrectly? Shouldn't interns get W-2s instead of 1099s? Is there any way to fix this after the fact or does he just have to pay the higher taxes?
0 coins
Jade Santiago
•8 It depends on how the internship was structured. If the company controlled when, where, and how he performed his work, provided equipment, and treated him like an employee, then yes, he probably should have received a W-2 instead of a 1099-MISC. This is called misclassification. You have a few options. First, make sure you claim all legitimate business expenses on Schedule C to reduce the taxable self-employment income - transportation, portion of phone/internet used for work, supplies, etc. This will lower the SE tax. If you believe he was misclassified, you could contact the company and request they correct it by issuing a W-2 instead, though many companies resist this. In extreme cases, you could file Form SS-8 for the IRS to determine his correct status, but this can be a lengthy process.
0 coins
Jade Santiago
15 I ran into the exact same situation with my daughter's summer research position last year! The university paid her with a 1099-MISC instead of a W-2, and we got hit with that surprise self-employment tax. After hours of frustration and research, I discovered taxr.ai (https://taxr.ai) which analyzes tax documents and situations like this. I uploaded her 1099-MISC and described the situation, and it immediately identified that she could claim business expenses to offset some of that income. It also confirmed she was probably misclassified but suggested the quickest solution was filing correctly with deductions rather than fighting the classification. The tool walked me through exactly what deductions were legitimate for her situation - saved us about $290 in taxes!
0 coins
Jade Santiago
•7 That sounds useful! Does it actually give you specific guidance about what expenses you can deduct? Like how do you prove those expenses if you didn't keep receipts?
0 coins
Jade Santiago
•9 I'm skeptical - wouldn't you need to actually run a business to claim business expenses? If someone's just an intern, what kinds of expenses would even qualify?
0 coins
Jade Santiago
•15 It absolutely gives specific guidance on deductible expenses based on your situation. For my daughter, it identified transportation costs to and from her research site, a portion of her laptop depreciation since she used it exclusively for the work, research materials she purchased, and even a percentage of her cell phone bill used for work communications. For documentation, the tool explained that while receipts are ideal, bank statements, credit card statements, and even reasonable estimates supported by a log can work in many cases. It even provided a template for tracking mileage and other expenses that would satisfy IRS requirements.
0 coins
Jade Santiago
9 Just wanted to follow up - I tried taxr.ai after seeing this post and I'm honestly impressed. I was skeptical at first (as you could tell from my comment), but it saved me a ton of headache with my son's internship situation. The tool identified that some of his equipment purchases and transportation costs were legitimate business expenses, reducing his taxable income by about $1,200. That cut his self-employment tax nearly in half! It even generated a clear explanation document that I'm keeping with our tax records in case of questions later. Definitely worth checking out if you're dealing with 1099 issues.
0 coins
Jade Santiago
6 After dealing with a similar situation, I spent HOURS trying to get through to someone at the IRS to confirm whether my daughter was correctly classified on her 1099-MISC. It was impossible - constant busy signals or disconnects after waiting on hold forever. Eventually I found Claimyr (https://claimyr.com) which got me connected to an actual IRS representative in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that many student internships are incorrectly classified and explained our options. She walked me through exactly what documentation we would need if we wanted to dispute the classification, but also confirmed that claiming legitimate business expenses was often the easier path. Either way, actually speaking to someone official gave us peace of mind about our approach.
0 coins
Jade Santiago
•3 How does this even work? I've tried calling the IRS like 10 times and always get disconnected or told to call back later.
0 coins
Jade Santiago
•12 Sounds like a scam honestly. Why would anyone need a service to call the IRS? And why would they be able to get through when regular people can't?
0 coins
Jade Santiago
•6 It uses technology to navigate the IRS phone system and secure your place in line. Instead of you waiting on hold for hours, their system does it for you, then calls you when an IRS agent is about to be connected. It's basically like having someone else wait in line for you. The reason it works is because their system can dial repeatedly using the optimal calling patterns and times of day when wait times are shorter. Once they get through, they transfer the call to you. Nothing scammy about it - they're just solving the frustration of trying to reach the IRS.
0 coins
Jade Santiago
12 I need to eat my words here. After expressing skepticism about Claimyr, I decided to try it because I was desperate. My son's tax situation with his 1099-MISC was stressing me out and I couldn't get through to the IRS after multiple attempts. The service actually worked exactly as described. I got a call back in about 35 minutes, and was connected to an IRS representative who was incredibly helpful. She explained that my son could file Form 8919 if we believed he was misclassified, which would eliminate the employer portion of the self-employment tax. She also confirmed which expenses would be legitimate deductions if we went the Schedule C route. This saved us at least $400 in taxes! Sometimes being wrong feels pretty good.
0 coins
Jade Santiago
18 Have you checked if Box 7 on the 1099-MISC is filled in? If not, the income might not be subject to self-employment tax. The 2020 1099-MISC form changed, and some income that used to go on that form now goes on 1099-NEC. The way TurboTax interprets these forms can sometimes cause this exact confusion!
0 coins
Jade Santiago
•1 I just double-checked and you're right - Box 3 is filled out for "Other Income" rather than Box 7. Does that mean we don't need to file a Schedule C at all? TurboTax still seems to think we do though.
0 coins
Jade Santiago
•18 That's great news! If the amount is in Box 3 "Other Income" and not Box 7, then this is NOT self-employment income. You should report this on Schedule 1, Line 8 as "Other Income" instead of on Schedule C. TurboTax might be incorrectly guiding you through the self-employment section because it sometimes assumes 1099-MISC equals self-employment. You'll need to back out of the self-employment/Schedule C section and find where to enter miscellaneous income instead. Look for something like "Less Common Income" or "Other Income" in the TurboTax navigation. This should eliminate the self-employment tax entirely!
0 coins
Jade Santiago
5 One additional thing to consider - if you're claiming your son as a dependent on your taxes, make sure you're indicating that correctly on his return. If TurboTax thinks he's filing independently when he's actually a dependent, that could cause calculation issues too!
0 coins
Jade Santiago
•11 This is a really important point! My daughter checked the wrong box about being claimed as a dependent last year and it messed up both our returns.
0 coins