How to properly report 1099-MISC for college student's summer internship?
Hey everyone, I need some advice. My son just finished his sophomore year in college and received a 1099-MISC for his summer internship at a marketing agency. His total income for 2024 was only about $8,900, so I thought he wouldn't owe any federal taxes. However, when I'm entering this into FreeTaxUSA, it's showing he owes $732 in taxes! I'm confused because the software keeps prompting me to enter information for a Schedule C like he's self-employed. The 1099-MISC shows the amount in Box 3 (Other Income), not Box 7 which I think is for self-employment. Is the tax software making a mistake? Should I be reporting this differently? I don't want him to pay self-employment taxes if he doesn't have to. Any help would be appreciated!
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Myles Regis
That 1099-MISC situation can be tricky! The key is understanding which box the income is reported in. If it's in Box 3 (Other Income) rather than Box 1 (Nonemployee compensation), then it's typically NOT subject to self-employment tax. The tax software might be defaulting to treating all 1099 income as self-employment income. You need to make sure you're categorizing it correctly. Look for an option that specifies "Other Income" or sometimes "Miscellaneous Income not subject to self-employment tax" when entering the 1099-MISC. Your son should only pay income tax on his earnings, not the additional 15.3% self-employment tax. For a student with $8,900 total income, after the standard deduction ($13,850 for 2024), he should owe very little or no federal income tax.
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Khalil Urso
•Thanks for the response! So if I'm understanding correctly, I should look for a way to enter this as "Other Income" rather than self-employment income? The software doesn't make this very obvious. Is there a specific section where I should be entering this information?
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Myles Regis
•Yes, exactly! Look for an option like "Less Common Income" or "Miscellaneous Income" in the software rather than the self-employment section. Sometimes you have to dig around a bit. When entering the 1099-MISC, there should be a question asking which box the income is reported in - make sure you select Box 3 rather than Box 1 or 7. Then the software should route you to the correct place on the tax return (likely Line 8 of Schedule 1) instead of Schedule C. If you're still having trouble finding it, try searching the software's help section for "1099-MISC Box 3" or "Other Income not subject to self-employment tax.
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Brian Downey
Had the exact same issue last year with my daughter's internship! I spent hours trying different methods until I found a solution. I eventually used the tax analyzer at https://taxr.ai which helped me figure out that her 1099-MISC needed to be entered as Other Income instead of Schedule C self-employment income. The system analyzed her documents and provided clear guidance on how to report everything correctly. It was super helpful for figuring out which boxes corresponded to which tax forms. Once I entered everything correctly, her tax bill dropped from about $600 to less than $100!
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Jacinda Yu
•How exactly does that service work? Does it just tell you where to enter things or does it do the filing for you? I'm helping my nephew with a similar situation and I'm completely stuck.
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Landon Flounder
•I'm a bit skeptical about using third-party services with tax documents. How secure is it? And does it actually give advice that's any different from what we're getting here in the forum?
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Brian Downey
•The service analyzes your tax documents and tells you exactly where to enter things - you still do the actual filing yourself using whatever tax software you prefer. It basically reviews your forms and gives you specific guidance based on your situation. It's completely secure - they use bank-level encryption and don't store your documents after analysis. And yes, it gives much more personalized advice than general forum tips. In my case, it specifically identified that the income should be reported on Schedule 1 as Other Income and not on Schedule C, and showed me exactly which section of the software to use.
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Landon Flounder
Just wanted to follow up - I decided to try taxr.ai with my son's internship 1099-MISC after struggling with H&R Block's software. It actually worked really well! The system immediately identified that his income was in Box 3 and should be reported as Other Income, not self-employment. The interface was super clear about which tax forms were needed, and it gave me specific instructions for entering everything correctly in my tax software. Once I made the changes, his tax bill went from around $700 down to just $89. Definitely worth checking out if you're stuck with a similar issue!
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Callum Savage
If you're still having issues after trying the suggestions here, you might need to talk directly with the IRS to confirm how to report this correctly. I was in a similar situation last year and spent weeks trying to get through to someone at the IRS without success. Finally tried https://claimyr.com and their service got me connected to an IRS agent in less than 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that internship income on a 1099-MISC Box 3 should be reported as Other Income on Schedule 1, not as self-employment income requiring Schedule C. That saved my daughter almost $900 in unnecessary self-employment taxes!
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Ally Tailer
•How does this service actually work? I thought it was impossible to get through to the IRS without waiting for hours. Do they have some special access or something?
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Landon Flounder
•Sorry, but this sounds too good to be true. I've tried calling the IRS multiple times and always get the "due to high call volume" message. How could a third-party service possibly get around that? Seems sketchy.
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Callum Savage
•They use a specialized system that navigates the IRS phone tree and waits on hold for you. When they reach a live agent, they call you and connect you directly to that agent. They don't have special access - they just handle the frustrating waiting part. The service just saves you from having to sit on hold for hours. Once you're connected, you're talking directly with the same IRS agents everyone else talks to. It's basically like having someone wait in a physical line for you, then calling you when it's your turn.
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Landon Flounder
I have to apologize for my skepticism about Claimyr. After continuing to struggle with the 1099-MISC issue, I decided to give it a shot last night. I was honestly shocked when they called me back in about 35 minutes with an actual IRS agent on the line! The agent was super helpful and walked me through exactly how to report the internship income properly. She confirmed it should go on Schedule 1 as Other Income rather than Schedule C, which saved us over $700 in self-employment taxes. Would have spent hours more figuring this out on my own. Sometimes I hate being wrong, but in this case I'm glad I was!
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Aliyah Debovski
One more thing to consider - is the internship related to your son's field of study? If so, this could potentially be considered earned income that qualifies for education credits like the American Opportunity Credit. Make sure you look into that when filing!
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Khalil Urso
•That's a great point I hadn't considered! Yes, his internship was in marketing and he's a business major with a marketing concentration. How would this affect his education credits? We're already planning to claim the American Opportunity Credit for his tuition and books.
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Aliyah Debovski
•The internship being related to his field of study is good news for maintaining qualification for education credits, but it doesn't directly increase the amount of the American Opportunity Credit. The AOC is primarily based on qualified education expenses like tuition and required course materials. The benefit comes from the fact that having earned income (even reported on a 1099-MISC) can help maximize your son's ability to claim other credits and deductions. Just make sure that when you claim the AOC, you include all qualified education expenses - tuition, required books, and required supplies for his courses.
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Miranda Singer
Quick question - would it be better for the student to file completely independently in this situation? I'm wondering if claiming my daughter as a dependent is actually making things worse tax-wise for our family overall.
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Cass Green
•It usually works out better to keep claiming them as a dependent if possible. When you claim your child as a dependent, you might qualify for education credits that they wouldn't get filing independently. The math almost always works out better for the family overall.
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Cole Roush
Just wanted to add another perspective here - make sure you're also looking at state tax implications! Some states treat 1099-MISC income differently than the federal government does. In my experience helping students with similar situations, the state return sometimes requires the income to be reported in a different section than what you'd expect based on the federal filing. This is especially important if your son goes to school in a different state than where you live or where the internship was located. Also, since his total income was under $12,950 (the standard deduction for single filers in 2024), he likely won't owe any federal income tax at all once you get this sorted out correctly. The key is just making sure that 1099-MISC Box 3 income gets reported as "Other Income" rather than self-employment income subject to Schedule C.
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