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Interns & Taxes

Is an internship the first job you’ve ever had? If so, you may be confused about how to properly fill out your taxes. If you are an unpaid intern, you do not need to worry because you cannot be taxed if you are not receiving an income. However, for paid interns, it can be a little trickier. To get more information, click on the questions below.

1. What is a W2?

Form W-2 is a Wage and Tax Statement that an employer is required to send to each employee and the Internal Revenue Service (IRS) at the end of the year. A W-2 reports an employee’s annual wages and the amount of taxes withheld from their paycheck.

2. What is a W9?

Form W-9 is a Request for Taxpayer Identification Number and Certification. This form is used to confirm a person’s name, address, and taxpayer identification number for employment or other income generating purposes. The information taken from the W-9 form is often used to generate a 1099 tax form.

3. How do I know if I am “exempt” or not when filling out my W9?

You do not need to fill in this section as an individual. Only certain businesses or entities with any reason for exemption need to fill out these spaces.

4. What is a 1099?

Form 1099 is often generated from the information listed on Form W-9. Form 1099 contains information about any income that may have been received by the taxpayer that would not normally be listed on Form W-2. This includes, but is not limited to income paid to a person as part of a contract; certain real estate transactions; dividends paid against an investment; and various other financial transactions.

5. Who gets a W2 and who gets a 1099?

Individual taxpayers are usually not responsible for actually completing any 1099 forms, except in a few circumstances. For example, if you are hired as an independent contractor, your employer may be required to fill out a 1099 form. 

Paid interns, on the other hand, who are not contracted to complete specific work, are often taxed like W-2 employees, which allows them to write-off any work-related expenses.

6. If my employer gives me a stipend, do I have to report it on my taxes?

If you are a volunteer or an unpaid fellow and you are offered a stipend, fellowship grant, or taxable scholarship, you may have to pay some taxes. 

Generally, the amount used for “qualifying educational expenses” is not taxable. These expenses include tuition and required fees, student activity fees, and other related expenses, such as books and supplies. However, the remaining amount not used on “qualifying educational expenses” is taxable. This includes expenses related to room and board, insurance, medical fees, transportation, and other personal or living expenses.  

According to the Internal Revenue Service (IRS), stipends may be reported on Form 1040, Form 1040-SR, or Form 1040-NR.

7. How much money do I need to make before filing taxes?

The minimum income amount depends on your filing status and age. In 2020, for example, the minimum for single filing status if under age 65 is $12,400.

8. How does a 1099 affect my taxes?

Independent contractors or 1099 contractors are self-employed for the purposes of taxation, which means that they are subject to self-employment tax and income tax. Self-employment tax includes Social Security and Medicare taxes. If you made more than $400, you need to pay self-employment tax. 

According to the Internal Revenue Service (IRS), independent contractors may report self-employment taxes on Form 1040 or Form 1040-SR. Income may be reported on Schedule C of Form 1040.

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