Student and 1099MISC from college

[S T]

I have a full time student at Community College that worked part-time in the office - The College issued a 1099 MISC form for $ 625 in year 2013

Student has no other income for 2013 -

I believe I should file a return due to the 1099 MISC - question is - do I have to subject the income to SE tax?

Thoughts

Thanks

Sandy

[ATSMAN]

No SE tax for the student! Line 21 income.

[oceanlovin'ea]

Because it is on a 1099-misc, you will need to put it on Schedule C-EZ and then list expense of the same amount to zero out the Schedule C. Then put on line 21.

Linda, EA

[FEDUKE404]

Creativity on Sch C

Because it is on a 1099-misc, you will need to put it on Schedule C-EZ and then list expense of the same amount to zero out the Schedule C. Then put on line 21.

Linda, EA

OK...I'm game.

Exactly what kind of $625 "expense" would you list on the Schedule C??

(Granted, you can easily hide things on line 2 of a Schedule C-EZ, but my question still stands.)

Of course, it might make for a good question how the school issued a Form 1099-MISC vs a W2. I have seen several instances where college students were doing (whatever appropriate and/or required) work for the school, and they received a W2 with NO entries for FICA/Medicare wages.

FE

[Koss]

Form 1099-MISC

First of all...

Is the amount in Box 7 or Box 3?

If it's in Box 3, then it is generally not subject to self-employment tax.

Did the student also receive a Form W-2?

If the amount is in Box 3, is it possible that this reflects some sort of scholarship or grant, and not compensation for services?

Even if the amount is not in Box 3, is it possible that the school put it in the wrong box??

FEDuke wrote:

I have seen several instances where college students were doing (whatever appropriate and/or required) work for the school, and they received a W2 with NO entries for FICA/Medicare wages.

I saw one like that last week. Some college students who work for the institution are exempt from social security and medicare tax. But I don't think that same exemption would apply to self-employment tax. It is certainly true that SE tax is the equivalent of FICA for those who are self-employed. But the two taxes are authorized by different sections of the Code. Moreover... the exemption for certain categories of college students arises out of the fact that they are working for the school at which they are enrolled. If the income is reported on a 1099-MISC and a Schedule C, then the person is not working for the college; they are working for themselves. That's why it's called self-employment.

BMK

[S T]

It is 1099 Misc Box 7 for $ 625 - Student is enrolled at the Comm College,

Have an email out for the question, what were you receiving the payments for, what type of work, etc.

Thanks,

Sandy

[ATSMAN]

OP already stated that the kid worked part time in the school office. I think the school should have issued a W2 instead of a 1099-Misc with box 7 income. If the preparer tries to justify business expenses and file a Sch C, in my opinion it will make the problem worse upon audit.

I would put the income on line 21, no SE and call it a day!

You could zero out the Sch C with an expense "Incorrectly issued 1099" and then put the income on line 21 if you wanted to avoid a CP2000 but I think IRS computers will match the line 21 to the 1099-Misc and leave you alone (I hope)!

[Burke]

I agree with the rest. It should have been a W-2, Box 1 only. (and state, if applicable.)

[oceanlovin'ea]

The daughter of one of my client's received a 1099-misc for work she did as part of her internship for her degree at college. They paid her on a 1099-misc. The company she interned for pays these people a pittance for long hours of hard work. but it was NOT self-employment income.

To take it off the Schedule C, you can go to other expenses and just put "not se income" and the amount.
I have done this before and never got a letter about it.
Then list on line 21.

If a 1099-misc for non employee compensation is issued, the IRS expects to see a schedule C in the return. If it is not there, a letter will be generated. This entry is to avoid the letter.

Linda, EA

[ttbtaxes]

No SE

I'd just put it on Line 21 and forget the Schedule C.

[S T]

Thank you all for posting

Of course most times than not the initial information is incorrect

My OP originally stated the Student was in the Office and earned the $ 625 - turns out that was not the case - The student receiving this 1099 MISC in Box 7 for $ 625, did some clean up work after some Football Games - I don't believe it really matters - still working for the college

Why the College chose the 1099 MISC Form, box 7 versus a W-2 form I don't know - if it were on W-2 form usually the Schools/colleges do not use the amounts for "subject to FICA/Mcare" so - $ 625 would have been exempt - Guessing it was all inputted into the system as an Independent Contractor and was generated due to the $ 600 rule.

Such a small amount - I am thinking to bypass the Sched C and just place on line 21 "not" subject to SE - there is no other income on the return, however, I do feel compelled to file a return.

Any more thoughts,

Sandy

[Burke]

If a 1099-misc for non employee compensation is issued, the IRS expects to see a schedule C in the return. If it is not there, a letter will be generated. This entry is to avoid the letter.
Linda, EA

I often put these on Line 21 -- no Sche C -- and it goes through just fine. Even if it is subj to SE tax, I do this under some circumstances, then complete Sche SE and it is still not a problem.