How does a full time student report 1099-NEC income (from university) and keep student FICA exemption?

Forum|Forum|5 years ago
February 16, 2021
2 replies
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The situation is a full-time student was paid by their university to do some part-time student teaching and they were given a 1099NEC for the pay. Filing this as self-employment income triggers the self-employment tax, but for this situation there is an exemption from paying FICA taxes for a student working for their university.

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linaj20201

He or she is not subject to FICA or self employment tax. They have two options:

1. They can contact the school for a corrected tax form. This amount should be reported on a Form W-2, not 1099-NEC.

2. They can enter the information under the 1099-NEC section in the TurboTax program, however, they will need to fill out a Form 8919 and SS-8. Here are the steps:

In TurboTax online,

Sign into your account, select Pick up where you left off
From the upper right menu, select Search and type in 1099nec and Enter
Select the Jump to 1099nec
Follow prompts
On screen, " Does one of these uncommon situations apply? select "It should be reported on W-2"
Follow prompts to continue

Students working for the same school they’re enrolled at may be temporarily exempt from paying Social Security taxes. However, only students who obtain employment because of their enrollment qualify. For more information, click here: Who is exempt from FICA

music2mel

This is exactly my question but the answer isn't complete. I chose to have it reported as w-2 but then it triggered 8919 which is then causing me to pay the FICA at that point. I thought I didn't have to pay any?

CatinaT1

To clarify, did you contact your school and have them issue you a W2? If so, you would only enter the W2 and not the 1099-NEC because the W2 would replace that form.

If you did not get a corrected W2 form from the school, you would have to enter the income as by Linaj202o above.

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Hal_Al

Employee

The bottom line is there is no good way around this mistake by the school.

Student employees are exempt from FICA. Student "employees" get a W-2. If you don't get a W-2, you're not classified as a student employee for tax purposes.

You have to decide how you're going to report the income. None of the choices are "right" because not issuing a W-2 was wrong.

Your choices are:

1. Report as previously described (shoulda been on a W-2) resulting in form 8819 and (worse yet) SS-8

2. Report is a self employment which the IRS expects when a 1099-NEC is issued

3. Report it as other income (answer sporadic income in the TT 1099-NEC interview). It's treated as unearned income, resulting in a smaller standard deduction for a student-dependent, effectively making more of it taxable.

4. Report it as taxable scholarship

I would do #4. For how to do that, in TurboTax, see:

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-1099-nec-graduate-student/01/2264008/highlight/false#M211285