Son received a W-2 and a 1099-NEC (expense reimbursement) from Internship

Forum|Forum|2 years ago
March 22, 2024
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My son had a summer internship for which he was a W-2 employee. He also received a 1099-NEC for a flat payment he received from the employer which was supposed to reflect a reimbursement for housing/travel expenses that was incurred for the summer. He didn't submit any documentation to the company reflecting these expenses. Is he required to file a Schedule C? Can he deduct expenses incurred, such as rent paid for the summer and/or milage traveling to the job?

Thank you.

Best answer by Vanessa A

After you enter the 1099-NEC, keep going and you will come to a screen that says, Does one of these uncommon situations apply? Select This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby

This will take it out of the self-employment category and put it in as other income.

AmyC

Employee

No need for Sch C. For the 1099-NEC, he did not intend to earn that money since it was a reimbursement. After the NEC entry, it will ask if this involved intent to earn money, select no and the sch C will not be required.

If he filed a sch C, he could write off expenses but would be hit with self employment tax for any remainder over $400. Since SE tax is 15.3%, he is probably better off just filing the income.

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SwagginsBAuthor

Hi, I appreciate your reply. The 1099-NEC step by step questionnaire doesn't offer the intent to earn money question that the 1099-MISC does (I tried entering it as 1099-MISC to see and it does have the intent to earn money question as you suggested in the MISC section). Unfortunately, for the 1099-NEC the questions only allow it to be characterized as a self-employment income. This characterization then leads to a bunch of errors during error check because TurboTax then assumes he was self-employed for the 1099-NEC portion of the income. This is in Premier so it doesn't have the Schedule C portion (it has the option to upgrade which I can do but feel it's not really self-employment). Thanks again for any suggestions you might have.