NASA Stipend

[TaxTime829]

Client working on masters degree... Worked for NASA as an intern for the summer... received $13,000 in 1099-Misc box 7.
I think this is a stipend but don't know how to report it on Sch C...
Anyone file a tax return for a NASA intern?

NASA did not provide a letter of any kind regarding this payment.

Two issues:
1. If it's a stipend... reported on Sch C box 7... and stipend is not for services then self employment tax should not be paid... don't know how to file Sch C without self employment tax as required by IRS.
2. If self employment income... can I deduct standard meal and housing rate for each day... this would be much more than income so a business loss which will reduce tax on other w2 income received.

09/28/19 Update
First... thank you for your responses... its great to see your points of view and advice... Tks again

So...
I submitted this question to NATP expert tax question people.
The response from them said stipends are taxable, she can't deduct any expenses and she also needs to pay self employment tax!
I just don't get it... either she's self employed or not...
IMHO
1. If she is self employed then she pays self employment tax and deducts her expenses.
2. If she is not self employed then she doesn't pay self employment tax and can't deduct her expenses.

One of the responses to this question stated the money should be reported on line 21 plus on Sch C with an expense that zeros out the self employment income.
this seems best to me but I have never done that before... don't want to generate an automatic audit.
Have any of you reported Sch C income on line 21 plus a dummy Sch C with income offset by an expense?

[TAXNJ]

Client working on masters degree... Worked for NASA as an intern for the summer... received $13,000 in 1099-Misc box 7.
I think this is a stipend but don't know how to report it on Sch C...
Anyone file a tax return for a NASA intern?

See IRS PUB 970

https://sfs.columbia.edu/tax-info

[ATSMAN]

Unless there is other supporting documents that this payment was a stipend it appears this person may have been classified as a sub contractor. Generally when a scholarship/stipend is awarded there is written communication for the purpose. I have seen those letters before. What is available in this case?

[TaxTime829]

What would be your justification for (possibly) deducting meals and housing costs ? ? ?

She traveled to California to work as an intern... Out of town meals and housing are common small business (1099-Misc box 7) deductions...

[Dude]

Assumption is the intern was not engaged in activity controlled by the employer thus the 1099. Makes perfect sense an intern would be acting like an independent contractor. Yeah right. Government: Do as we say not as we do.

[TAXNJ]

.

She traveled to California to work as an intern... Out of town meals and housing are common small business (1099-Misc box 7) deductions...

You should give all the facts in the beginning post so it does not turn into a guessing game with back and forth questions.

And now it seems like you are thinking the issue and answering your own questions.

[Lion]

Did CA become her tax home? Or was she working at home but has to travel to other NASA sites? If so, why didn't NASA reimburse her?

[TaxGuyBill]

There is no way an "intern" is self employed.

I would probably report it as "Other Income" on Line 21. To avoid an IRS notice, I would report the income on Schedule C and 'back it out' with an equal deduction on Schedule C (resulting in $0 profit on Schedule C).

[Lion]

I had several college students with internships last summer that received Forms 1099-MISC instead of W-2s. They were private companies and not the colleges or nonprofits or government agencies.

[ATSMAN]

There is no way an "intern" is self employed.

I would probably report it as "Other Income" on Line 21. To avoid an IRS notice, I would report the income on Schedule C and 'back it out' with an equal deduction on Schedule C (resulting in $0 profit on Schedule C).

I would be cautious. There has to be other supporting documents that it was a paid internship and not just "summer work". I would not be that quick to zero out on Sch C in the absence of any supporting documentation.

[TAXNJ]

I would be cautious. There has to be other supporting documents that it was a paid internship and not just "summer work". I would not be that quick to zero out on Sch C in the absence of any supporting documentation.

Agree. Well stated. Poster needs more documentation from client. It’s either self employed or employee and there is enough resources to help make that determination with specific client information Poster needs from client.

[TAXNJ]

So, following your logic, if I wanted a summer job of perhaps four months duration to enjoy the beach in a nearby state, I could deduct all of my food and lodging while I was there? ? ?
I don't THINK so !!

Not a bad idea if can find a legal way within the law.

[New York Enrolled Agent]

Poster needs more documentation from client. .

Actually, I think the poster needs to provide more information to the participants on this message board. People have referenced different ideas (such as tax home, college students) but with limited facts it is difficult to give a good answer.

Working on a masters degree - full time student with a summer gig???
Summer job - does the taxpayer have a "regular" job???
Tax home - so many questions - regular place of employment???

An example of a taxpayer loss is Hantzis 638 F2d. 248 (CA1) - married full time law student in Boston - worked as an intern for the summer in NYC - deductions not allowed. Is this close to the original poster's facts? Who knows - not enough information/

[TaxGuyBill]

I stand by my original statement. There is no way an "intern" is self employed, which means it does NOT go on Schedule C.

While it is possible it is a misclassified employee (which would require Form 8919 and probably a SS-8), that seems unlikely.

The others said, you would want to make sure it actually was an "internship". But assuming that is correct, an "intern" is not self employed.

[Lion]

Does the IRS have a specific definition of "intern" for tax purposes? If so, do you really trust hiring companies to use the word as the IRS defines it? OP needs to do his own research and is probably trying to find some direction here.