1099-MISC Box 7 - Declare as Other Income?

Discussion in 'Tax' started by ihleventhal, Apr 12, 2011.

  1. ihleventhal

    ihleventhal Guest

    My daughter, who is currently a high school student, worked as an
    intern for a law firm last summer and made about $2000. The firm sent
    her a 1099-MISC with the income listed in Box 7, non-employee
    compensation. We were doing her tax return with TurboTax and it asked
    her a series of questions about the income, including whether she had
    done this type of work in 2009 (Answer: No) and whether she planned to
    do this type of work in 2001 or 2012 (Answer: No plans at this time).
    Based on her answers, TurboTax classified this as a "one time side-
    job" and listed it as "Other Income". This leads to more favorable tax
    treatment as she doesn't have to pay the self-employment tax, but I'm
    wondering if this is really correct. I've done lots of Googling on
    this topic, and it seems like for similar cases of a summer job with a
    1099-MISC, almost every post I've seen says that it has to be treated
    as self-employment income. Please let me know if it's OK to consider
    this as "Other Income", as TurboTax is indicating. Thanks!

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    ihleventhal, Apr 12, 2011
    #1
    1. Advertising

  2. ihleventhal

    paultry Guest

    On 4/12/2011 1:43 PM, ihleventhal wrote:
    > My daughter, who is currently a high school student, worked as an
    > intern for a law firm last summer and made about $2000. The firm sent
    > her a 1099-MISC with the income listed in Box 7, non-employee
    > compensation. We were doing her tax return with TurboTax and it asked
    > her a series of questions about the income, including whether she had
    > done this type of work in 2009 (Answer: No) and whether she planned to
    > do this type of work in 2001 or 2012 (Answer: No plans at this time).
    > Based on her answers, TurboTax classified this as a "one time side-
    > job" and listed it as "Other Income". This leads to more favorable tax
    > treatment as she doesn't have to pay the self-employment tax, but I'm
    > wondering if this is really correct. I've done lots of Googling on
    > this topic, and it seems like for similar cases of a summer job with a
    > 1099-MISC, almost every post I've seen says that it has to be treated
    > as self-employment income. Please let me know if it's OK to consider
    > this as "Other Income", as TurboTax is indicating. Thanks!
    >

    Shame on the law firm! Since an internship is usually an
    entry level job requiring close supervision, she most likely
    should have been classified as a W-2 employee and not as a
    1099 self-employed person. If the lawyers won't fix their
    error, follow the guidance here:

    http://www.irs.gov/faqs/faq/0,,id=199741,00.html

    Employment tax auditors enjoy explaining the law to lawyers
    who should know better.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    paultry, Apr 12, 2011
    #2
    1. Advertising

  3. paultry <> wrote:
    > ihleventhal wrote:


    >> My daughter, who is currently a high school student, worked as
    >> an intern for a law firm last summer and made about $2000. The
    >> firm sent her a 1099-MISC with the income listed in Box 7,
    >> non-employee compensation.
    >>

    > Shame on the law firm! Since an internship is usually an
    > entry level job requiring close supervision, she most likely
    > should have been classified as a W-2 employee and not as a
    > 1099 self-employed person. If the lawyers won't fix their
    > error, follow the guidance here:
    >
    > http://www.irs.gov/faqs/faq/0,,id=199741,00.html
    >
    > Employment tax auditors enjoy explaining the law to lawyers
    > who should know better.


    While it's mentioned on the webpage Paul linked to, here again for
    emphasis is the form to file with the IRS to have them determine
    employee status:

    http://www.irs.gov/pub/irs-pdf/fss8.pdf

    --
    Stu
    http://DownToEarthLawyer.com

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    Stuart A. Bronstein, Apr 12, 2011
    #3
  4. ihleventhal

    D. Stussy Guest

    "paultry" <> wrote in message
    news:io2cq2$51c$...
    > On 4/12/2011 1:43 PM, ihleventhal wrote:
    > > My daughter, who is currently a high school student, worked as an
    > > intern for a law firm last summer and made about $2000. The firm sent
    > > her a 1099-MISC with the income listed in Box 7, non-employee
    > > compensation. We were doing her tax return with TurboTax and it asked
    > > her a series of questions about the income, including whether she had
    > > done this type of work in 2009 (Answer: No) and whether she planned to
    > > do this type of work in 2001 or 2012 (Answer: No plans at this time).
    > > Based on her answers, TurboTax classified this as a "one time side-
    > > job" and listed it as "Other Income". This leads to more favorable tax
    > > treatment as she doesn't have to pay the self-employment tax, but I'm
    > > wondering if this is really correct. I've done lots of Googling on
    > > this topic, and it seems like for similar cases of a summer job with a
    > > 1099-MISC, almost every post I've seen says that it has to be treated
    > > as self-employment income. Please let me know if it's OK to consider
    > > this as "Other Income", as TurboTax is indicating. Thanks!
    > >

    > Shame on the law firm! Since an internship is usually an
    > entry level job requiring close supervision, she most likely
    > should have been classified as a W-2 employee and not as a
    > 1099 self-employed person. If the lawyers won't fix their
    > error, follow the guidance here:
    >
    > http://www.irs.gov/faqs/faq/0,,id=199741,00.html
    >
    > Employment tax auditors enjoy explaining the law to lawyers
    > who should know better.


    Agreed. She was an employee - no doubt here.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    D. Stussy, Apr 13, 2011
    #4
  5. ihleventhal

    ihleventhal Guest

    On Apr 12, 5:04 pm, "D. Stussy" <>
    wrote:
    > "paultry" <> wrote in message
    >
    > news:io2cq2$51c$...
    >
    >
    >
    > > On 4/12/2011 1:43 PM, ihleventhal wrote:
    > > > My daughter, who is currently a high school student, worked as an
    > > > intern for a law firm last summer and made about $2000. The firm sent
    > > > her a 1099-MISC with the income listed in Box 7, non-employee
    > > > compensation. We were doing her tax return with TurboTax and it asked
    > > > her a series of questions about the income, including whether she had
    > > > done this type of work in 2009 (Answer: No) and whether she planned to
    > > > do this type of work in 2001 or 2012 (Answer: No plans at this time).
    > > > Based on her answers, TurboTax classified this as a "one time side-
    > > > job" and listed it as "Other Income". This leads to more favorable tax
    > > > treatment as she doesn't have to pay the self-employment tax, but I'm
    > > > wondering if this is really correct. I've done lots of Googling on
    > > > this topic, and it seems like for similar cases of a summer job with a
    > > > 1099-MISC, almost every post I've seen says that it has to be treated
    > > > as self-employment income. Please let me know if it's OK to consider
    > > > this as "Other Income", as TurboTax is indicating. Thanks!

    >
    > > Shame on the law firm!  Since an internship is usually an
    > > entry level job requiring close supervision, she most likely
    > > should have been classified as a W-2 employee and not as a
    > > 1099 self-employed person.  If the lawyers won't fix their
    > > error, follow the guidance here:

    >
    > >http://www.irs.gov/faqs/faq/0,,id=199741,00.html

    >
    > > Employment tax auditors enjoy explaining the law to lawyers
    > > who should know better.

    >
    > Agreed.  She was an employee - no doubt here.


    Hi All,

    Yes, I agree that my daughter should have been classified as an
    employee and given a W-2. However, I don't want to make an issue of
    this with them, as she will want to use them as an important
    reference.

    Therefore, what I want to understand is whether or not TurboTax's
    classification of the income as "Other Income" due to it being a "one-
    time side-job" is allowable. Thanks!

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    ihleventhal, Apr 13, 2011
    #5
  6. ihleventhal

    paultry Guest

    On 4/12/2011 8:15 PM, ihleventhal wrote:
    > On Apr 12, 5:04 pm, "D. Stussy"<>
    > wrote:
    >> "paultry"<> wrote in message
    >>
    >> news:io2cq2$51c$...
    >>
    >>
    >>
    >>> On 4/12/2011 1:43 PM, ihleventhal wrote:
    >>>> My daughter, who is currently a high school student, worked as an
    >>>> intern for a law firm last summer and made about $2000. The firm sent
    >>>> her a 1099-MISC with the income listed in Box 7, non-employee
    >>>> compensation. We were doing her tax return with TurboTax and it asked
    >>>> her a series of questions about the income, including whether she had
    >>>> done this type of work in 2009 (Answer: No) and whether she planned to
    >>>> do this type of work in 2001 or 2012 (Answer: No plans at this time).
    >>>> Based on her answers, TurboTax classified this as a "one time side-
    >>>> job" and listed it as "Other Income". This leads to more favorable tax
    >>>> treatment as she doesn't have to pay the self-employment tax, but I'm
    >>>> wondering if this is really correct. I've done lots of Googling on
    >>>> this topic, and it seems like for similar cases of a summer job with a
    >>>> 1099-MISC, almost every post I've seen says that it has to be treated
    >>>> as self-employment income. Please let me know if it's OK to consider
    >>>> this as "Other Income", as TurboTax is indicating. Thanks!

    >>
    >>> Shame on the law firm! Since an internship is usually an
    >>> entry level job requiring close supervision, she most likely
    >>> should have been classified as a W-2 employee and not as a
    >>> 1099 self-employed person. If the lawyers won't fix their
    >>> error, follow the guidance here:

    >>
    >>> http://www.irs.gov/faqs/faq/0,,id=199741,00.html

    >>
    >>> Employment tax auditors enjoy explaining the law to lawyers
    >>> who should know better.

    >>
    >> Agreed. She was an employee - no doubt here.

    >
    > Hi All,
    >
    > Yes, I agree that my daughter should have been classified as an
    > employee and given a W-2. However, I don't want to make an issue of
    > this with them, as she will want to use them as an important
    > reference.
    >
    > Therefore, what I want to understand is whether or not TurboTax's
    > classification of the income as "Other Income" due to it being a "one-
    > time side-job" is allowable. Thanks!
    >

    Not according to the IRS guidance given in he link I
    provided which says, in part:

    "Unless you think you were an employee, you report your
    non-employee compensation on Form 1040, Schedule C (PDF),
    Profit or Loss from Business (Sole Proprietorship), or Form
    1040, Schedule C-EZ (PDF), Net Profit from Business:

    * You also need to complete Form 1040, Schedule SE
    (PDF), Self-Employment Tax, and pay self-employment tax on
    your net earnings from self-employment, if you had net
    earnings from self-employment of $400 or more."

    An expensive way for a young person to learn a tax lesson or
    to gain a job reference. It's a sad situation seen
    repeatedly in the construction trades. Laborers treated as
    independent contractors with no withholding, no matching
    FICA, no workers' comp, no unemployment comp, and large
    uncollectible tax liens. To complain means loss of job and
    income.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    paultry, Apr 13, 2011
    #6
  7. ihleventhal

    D. Stussy Guest

    "ihleventhal" <> wrote in message
    news:...
    > On Apr 12, 5:04 pm, "D. Stussy" <>
    > wrote:
    > > "paultry" <> wrote in message
    > > news:io2cq2$51c$...
    > > > On 4/12/2011 1:43 PM, ihleventhal wrote:
    > > > > My daughter, who is currently a high school student, worked as an
    > > > > intern for a law firm last summer and made about $2000. The firm

    sent
    > > > > her a 1099-MISC with the income listed in Box 7, non-employee
    > > > > compensation. We were doing her tax return with TurboTax and it

    asked
    > > > > her a series of questions about the income, including whether she

    had
    > > > > done this type of work in 2009 (Answer: No) and whether she planned

    to
    > > > > do this type of work in 2001 or 2012 (Answer: No plans at this

    time).
    > > > > Based on her answers, TurboTax classified this as a "one time side-
    > > > > job" and listed it as "Other Income". This leads to more favorable

    tax
    > > > > treatment as she doesn't have to pay the self-employment tax, but

    I'm
    > > > > wondering if this is really correct. I've done lots of Googling on
    > > > > this topic, and it seems like for similar cases of a summer job

    with a
    > > > > 1099-MISC, almost every post I've seen says that it has to be

    treated
    > > > > as self-employment income. Please let me know if it's OK to

    consider
    > > > > this as "Other Income", as TurboTax is indicating. Thanks!

    > >
    > > > Shame on the law firm! Since an internship is usually an
    > > > entry level job requiring close supervision, she most likely
    > > > should have been classified as a W-2 employee and not as a
    > > > 1099 self-employed person. If the lawyers won't fix their
    > > > error, follow the guidance here:

    > >
    > > >http://www.irs.gov/faqs/faq/0,,id=199741,00.html

    > >
    > > > Employment tax auditors enjoy explaining the law to lawyers
    > > > who should know better.

    > >
    > > Agreed. She was an employee - no doubt here.

    >
    > Hi All,
    >
    > Yes, I agree that my daughter should have been classified as an
    > employee and given a W-2. However, I don't want to make an issue of
    > this with them, as she will want to use them as an important
    > reference.


    You WANT [her] to use as a reference a LAW FIRM that can't follow the law?
    I think you have larger problems than how to deal with this tax error.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    D. Stussy, Apr 13, 2011
    #7
  8. "D. Stussy" <> wrote:

    >> Yes, I agree that my daughter should have been classified as an
    >> employee and given a W-2. However, I don't want to make an
    >> issue of this with them, as she will want to use them as an
    >> important reference.

    >
    > You WANT [her] to use as a reference a LAW FIRM that can't
    > follow the law? I think you have larger problems than how to
    > deal with this tax error.


    I have to agree with that. If a law firm either doesn't know or
    doesn't care enough to comply with federal law, that's not the kind
    of recommendation she should want.

    --
    Stu
    http://DownToEarthLawyer.com

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    Stuart A. Bronstein, Apr 13, 2011
    #8
  9. ihleventhal

    Alan Guest

    On 4/12/2011 7:15 PM, ihleventhal wrote:
    > On Apr 12, 5:04 pm, "D. Stussy"<>
    > wrote:
    >> "paultry"<> wrote in message
    >>
    >> news:io2cq2$51c$...
    >>
    >>
    >>
    >>> On 4/12/2011 1:43 PM, ihleventhal wrote:
    >>>> My daughter, who is currently a high school student, worked as an
    >>>> intern for a law firm last summer and made about $2000. The firm sent
    >>>> her a 1099-MISC with the income listed in Box 7, non-employee
    >>>> compensation. We were doing her tax return with TurboTax and it asked
    >>>> her a series of questions about the income, including whether she had
    >>>> done this type of work in 2009 (Answer: No) and whether she planned to
    >>>> do this type of work in 2001 or 2012 (Answer: No plans at this time).
    >>>> Based on her answers, TurboTax classified this as a "one time side-
    >>>> job" and listed it as "Other Income". This leads to more favorable tax
    >>>> treatment as she doesn't have to pay the self-employment tax, but I'm
    >>>> wondering if this is really correct. I've done lots of Googling on
    >>>> this topic, and it seems like for similar cases of a summer job with a
    >>>> 1099-MISC, almost every post I've seen says that it has to be treated
    >>>> as self-employment income. Please let me know if it's OK to consider
    >>>> this as "Other Income", as TurboTax is indicating. Thanks!

    >>
    >>> Shame on the law firm! Since an internship is usually an
    >>> entry level job requiring close supervision, she most likely
    >>> should have been classified as a W-2 employee and not as a
    >>> 1099 self-employed person. If the lawyers won't fix their
    >>> error, follow the guidance here:

    >>
    >>> http://www.irs.gov/faqs/faq/0,,id=199741,00.html

    >>
    >>> Employment tax auditors enjoy explaining the law to lawyers
    >>> who should know better.

    >>
    >> Agreed. She was an employee - no doubt here.

    >
    > Hi All,
    >
    > Yes, I agree that my daughter should have been classified as an
    > employee and given a W-2. However, I don't want to make an issue of
    > this with them, as she will want to use them as an important
    > reference.
    >
    > Therefore, what I want to understand is whether or not TurboTax's
    > classification of the income as "Other Income" due to it being a "one-
    > time side-job" is allowable. Thanks!
    >

    The direct answer to your very specific question is that payment for her
    services is taxable compensation, not "Other Income". It goes on either
    a Schedule C or C-EZ.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    Alan, Apr 13, 2011
    #9
  10. ihleventhal

    Guest

    On Apr 13, 8:47 am, "Stuart A. Bronstein" <>
    wrote:
    > "D. Stussy" <> wrote:


    > >> Yes, I agree that my daughter should have been classified as an
    > >> employee and given a W-2. However, I don't want to make an
    > >> issue of this with them, as she will want to use them as an
    > >> important reference.

    >
    > > You WANT [her] to use as a reference a LAW FIRM that can't
    > > follow the law? I think you have larger problems than how to
    > > deal with this tax error.

    >
    > I have to agree with that.  If a law firm either doesn't know or
    > doesn't care enough to comply with federal law, that's not the kind
    > of recommendation she should want.


    Their decision to not issue a W-2 should not reflect on the rest of
    what they do, such as corporate, antitrust, immigration, civil laws,
    etc.

    Besides, if they issue a W-2 they would just pay less to make up their
    portion of social security, FUTA, SDI, etc.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    , Apr 14, 2011
    #10
  11. "" <> wrote:

    >> I have to agree with that. ÿIf a law firm either doesn't know
    >> or doesn't care enough to comply with federal law, that's not
    >> the kind of recommendation she should want.

    >
    > Their decision to not issue a W-2 should not reflect on the rest
    > of what they do, such as corporate, antitrust, immigration,
    > civil laws, etc.


    Perhaps not. But it does reflect a sloppiness at least. Though
    you're right, they may be more careful if someone is paying them $500
    per hour.

    > Besides, if they issue a W-2 they would just pay less to make up
    > their portion of social security, FUTA, SDI, etc.


    If they had offered the job at the rate they would have quoted if
    they issued a W-2 and spend the same amount, it might have been lower
    than the worker would have been willing to accept.

    --
    Stu
    http://DownToEarthLawyer.com

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    Stuart A. Bronstein, Apr 14, 2011
    #11
  12. ihleventhal

    D. Stussy Guest

    "Alan" <> wrote in message
    news:io55o8$785$...
    > On 4/12/2011 7:15 PM, ihleventhal wrote:
    > > On Apr 12, 5:04 pm, "D. Stussy"<>
    > > wrote:
    > >> "paultry"<> wrote in message
    > >> news:io2cq2$51c$...
    > >>> On 4/12/2011 1:43 PM, ihleventhal wrote:
    > >>>> My daughter, who is currently a high school student, worked as an
    > >>>> intern for a law firm last summer and made about $2000. The firm

    sent
    > >>>> her a 1099-MISC with the income listed in Box 7, non-employee
    > >>>> compensation. We were doing her tax return with TurboTax and it

    asked
    > >>>> her a series of questions about the income, including whether she

    had
    > >>>> done this type of work in 2009 (Answer: No) and whether she planned

    to
    > >>>> do this type of work in 2001 or 2012 (Answer: No plans at this

    time).
    > >>>> Based on her answers, TurboTax classified this as a "one time side-
    > >>>> job" and listed it as "Other Income". This leads to more favorable

    tax
    > >>>> treatment as she doesn't have to pay the self-employment tax, but

    I'm
    > >>>> wondering if this is really correct. I've done lots of Googling on
    > >>>> this topic, and it seems like for similar cases of a summer job with

    a
    > >>>> 1099-MISC, almost every post I've seen says that it has to be

    treated
    > >>>> as self-employment income. Please let me know if it's OK to consider
    > >>>> this as "Other Income", as TurboTax is indicating. Thanks!
    > >>
    > >>> Shame on the law firm! Since an internship is usually an
    > >>> entry level job requiring close supervision, she most likely
    > >>> should have been classified as a W-2 employee and not as a
    > >>> 1099 self-employed person. If the lawyers won't fix their
    > >>> error, follow the guidance here:
    > >>
    > >>> http://www.irs.gov/faqs/faq/0,,id=199741,00.html
    > >>
    > >>> Employment tax auditors enjoy explaining the law to lawyers
    > >>> who should know better.
    > >>
    > >> Agreed. She was an employee - no doubt here.

    > >
    > > Hi All,
    > >
    > > Yes, I agree that my daughter should have been classified as an
    > > employee and given a W-2. However, I don't want to make an issue of
    > > this with them, as she will want to use them as an important
    > > reference.
    > >
    > > Therefore, what I want to understand is whether or not TurboTax's
    > > classification of the income as "Other Income" due to it being a "one-
    > > time side-job" is allowable. Thanks!
    > >

    > The direct answer to your very specific question is that payment for her
    > services is taxable compensation, not "Other Income". It goes on either
    > a Schedule C or C-EZ.


    But the correct answer is to put it on line 7 of the 1040 and follow the
    procedure for a misclassifed [employee] worker.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    D. Stussy, Apr 15, 2011
    #12
  13. ihleventhal

    Alan Guest

    On 4/14/2011 5:12 PM, D. Stussy wrote:
    > "Alan"<> wrote in message
    > news:io55o8$785$...
    >> On 4/12/2011 7:15 PM, ihleventhal wrote:
    >>> On Apr 12, 5:04 pm, "D. Stussy"<>
    >>> wrote:
    >>>> "paultry"<> wrote in message
    >>>> news:io2cq2$51c$...
    >>>>> On 4/12/2011 1:43 PM, ihleventhal wrote:
    >>>>>> My daughter, who is currently a high school student, worked as an
    >>>>>> intern for a law firm last summer and made about $2000. The firm

    > sent
    >>>>>> her a 1099-MISC with the income listed in Box 7, non-employee
    >>>>>> compensation. We were doing her tax return with TurboTax and it

    > asked
    >>>>>> her a series of questions about the income, including whether she

    > had
    >>>>>> done this type of work in 2009 (Answer: No) and whether she planned

    > to
    >>>>>> do this type of work in 2001 or 2012 (Answer: No plans at this

    > time).
    >>>>>> Based on her answers, TurboTax classified this as a "one time side-
    >>>>>> job" and listed it as "Other Income". This leads to more favorable

    > tax
    >>>>>> treatment as she doesn't have to pay the self-employment tax, but

    > I'm
    >>>>>> wondering if this is really correct. I've done lots of Googling on
    >>>>>> this topic, and it seems like for similar cases of a summer job with

    > a
    >>>>>> 1099-MISC, almost every post I've seen says that it has to be

    > treated
    >>>>>> as self-employment income. Please let me know if it's OK to consider
    >>>>>> this as "Other Income", as TurboTax is indicating. Thanks!
    >>>>
    >>>>> Shame on the law firm! Since an internship is usually an
    >>>>> entry level job requiring close supervision, she most likely
    >>>>> should have been classified as a W-2 employee and not as a
    >>>>> 1099 self-employed person. If the lawyers won't fix their
    >>>>> error, follow the guidance here:
    >>>>
    >>>>> http://www.irs.gov/faqs/faq/0,,id=199741,00.html
    >>>>
    >>>>> Employment tax auditors enjoy explaining the law to lawyers
    >>>>> who should know better.
    >>>>
    >>>> Agreed. She was an employee - no doubt here.
    >>>
    >>> Hi All,
    >>>
    >>> Yes, I agree that my daughter should have been classified as an
    >>> employee and given a W-2. However, I don't want to make an issue of
    >>> this with them, as she will want to use them as an important
    >>> reference.
    >>>
    >>> Therefore, what I want to understand is whether or not TurboTax's
    >>> classification of the income as "Other Income" due to it being a "one-
    >>> time side-job" is allowable. Thanks!
    >>>

    >> The direct answer to your very specific question is that payment for her
    >> services is taxable compensation, not "Other Income". It goes on either
    >> a Schedule C or C-EZ.

    >
    > But the correct answer is to put it on line 7 of the 1040 and follow the
    > procedure for a misclassifed [employee] worker.
    >

    1. The "correct answer" was already provided and he responded that he
    did not care to use that approach and he still wanted to know whether it
    was other income or compensation. My answer was on point.
    2. No one in this group has any idea as to what the correct answer is
    because no one has all the facts about the child's employment. The only
    statement was that she was an intern for a law firm. I can build a
    variety of circumstances that would not make the child a part-time
    employee. So while it may be likely, she has been treated incorrectly as
    an independent contractor, I would like more facts before making that
    determination.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    Alan, Apr 15, 2011
    #13
  14. ihleventhal

    D. Stussy Guest

    "Alan" <> wrote in message
    news:io83ua$p5h$...
    > On 4/14/2011 5:12 PM, D. Stussy wrote:
    > > "Alan"<> wrote in message
    > > news:io55o8$785$...
    > >> On 4/12/2011 7:15 PM, ihleventhal wrote:
    > >>> On Apr 12, 5:04 pm, "D. Stussy"<>
    > >>> wrote:
    > >>>> "paultry"<> wrote in message
    > >>>> news:io2cq2$51c$...
    > >>>>> On 4/12/2011 1:43 PM, ihleventhal wrote:
    > >>>>>> My daughter, who is currently a high school student, worked as an
    > >>>>>> intern for a law firm last summer and made about $2000. The firm

    > > sent
    > >>>>>> her a 1099-MISC with the income listed in Box 7, non-employee
    > >>>>>> compensation. We were doing her tax return with TurboTax and it

    > > asked
    > >>>>>> her a series of questions about the income, including whether she

    > > had
    > >>>>>> done this type of work in 2009 (Answer: No) and whether she

    planned
    > > to
    > >>>>>> do this type of work in 2001 or 2012 (Answer: No plans at this

    > > time).
    > >>>>>> Based on her answers, TurboTax classified this as a "one time

    side-
    > >>>>>> job" and listed it as "Other Income". This leads to more favorable

    > > tax
    > >>>>>> treatment as she doesn't have to pay the self-employment tax, but

    > > I'm
    > >>>>>> wondering if this is really correct. I've done lots of Googling on
    > >>>>>> this topic, and it seems like for similar cases of a summer job

    with
    > > a
    > >>>>>> 1099-MISC, almost every post I've seen says that it has to be

    > > treated
    > >>>>>> as self-employment income. Please let me know if it's OK to

    consider
    > >>>>>> this as "Other Income", as TurboTax is indicating. Thanks!
    > >>>>
    > >>>>> Shame on the law firm! Since an internship is usually an
    > >>>>> entry level job requiring close supervision, she most likely
    > >>>>> should have been classified as a W-2 employee and not as a
    > >>>>> 1099 self-employed person. If the lawyers won't fix their
    > >>>>> error, follow the guidance here:
    > >>>>
    > >>>>> http://www.irs.gov/faqs/faq/0,,id=199741,00.html
    > >>>>
    > >>>>> Employment tax auditors enjoy explaining the law to lawyers
    > >>>>> who should know better.
    > >>>>
    > >>>> Agreed. She was an employee - no doubt here.
    > >>>
    > >>> Hi All,
    > >>>
    > >>> Yes, I agree that my daughter should have been classified as an
    > >>> employee and given a W-2. However, I don't want to make an issue of
    > >>> this with them, as she will want to use them as an important
    > >>> reference.
    > >>>
    > >>> Therefore, what I want to understand is whether or not TurboTax's
    > >>> classification of the income as "Other Income" due to it being a

    "one-
    > >>> time side-job" is allowable. Thanks!
    > >>>
    > >> The direct answer to your very specific question is that payment for

    her
    > >> services is taxable compensation, not "Other Income". It goes on

    either
    > >> a Schedule C or C-EZ.

    > >
    > > But the correct answer is to put it on line 7 of the 1040 and follow

    the
    > > procedure for a misclassifed [employee] worker.
    > >

    > 1. The "correct answer" was already provided and he responded that he
    > did not care to use that approach and he still wanted to know whether it
    > was other income or compensation. My answer was on point.
    > 2. No one in this group has any idea as to what the correct answer is
    > because no one has all the facts about the child's employment. The only
    > statement was that she was an intern for a law firm. I can build a
    > variety of circumstances that would not make the child a part-time
    > employee. So while it may be likely, she has been treated incorrectly as
    > an independent contractor, I would like more facts before making that
    > determination.


    An "intern" is not going to be an independent contractor no matter how one
    addresses the relationship or fills out a Form SS-8. The very name of the
    job indicates that such a person is going to receive signficant direction
    from an employer. Advising that Schedule C could apply in such a situation
    is itself malpractice.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    D. Stussy, Apr 16, 2011
    #14
  15. ihleventhal

    Alan Guest

    On 4/16/2011 2:31 AM, D. Stussy wrote:
    >>>

    >> 1. The "correct answer" was already provided and he responded that he
    >> did not care to use that approach and he still wanted to know whether it
    >> was other income or compensation. My answer was on point.
    >> 2. No one in this group has any idea as to what the correct answer is
    >> because no one has all the facts about the child's employment. The only
    >> statement was that she was an intern for a law firm. I can build a
    >> variety of circumstances that would not make the child a part-time
    >> employee. So while it may be likely, she has been treated incorrectly as
    >> an independent contractor, I would like more facts before making that
    >> determination.

    >
    > An "intern" is not going to be an independent contractor no matter how one
    > addresses the relationship or fills out a Form SS-8. The very name of the
    > job indicates that such a person is going to receive signficant direction
    > from an employer. Advising that Schedule C could apply in such a situation
    > is itself malpractice.
    >

    1. Names of jobs have no relevance.
    2. The term "intern" is not defined in labor law or the tax code.
    3. You are either an employee or an independent contractor.

    I once worked on assignment with a very large law firm hired to defend a
    corporation in an antitrust case. The law firm hired a very large number
    of temporary staff during the discovery phase and pre-trial. In fact,
    the temporary staff was larger than the permanent staff assigned by the
    large firm and the corporation. Some of the hires were law students on
    summer break. They were hired by the law firm and were referred to by
    the associates as "interns." Othe hires were usually referred to as
    temps. These workers took their direction from my team (the corporation)
    and not the law firm. An assignment might be something like, get me a
    copy of all the trial testimony and/or all depositions entered into the
    record for Mr. John Doe, the plaintiffs expert witness. I want it by
    next Monday. They received very little in the way of instructions as to
    how, where and when to perform the job. They were given a login ID and
    password to Lexis-Nexis. They could come and go as they pleased. They
    could do their research in any manner they chose. Some used available
    terminals, some used the law firm's library, others used the law library
    at their school. They received no benefits and had no written contract.
    They received a 1099.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    Alan, Apr 16, 2011
    #15
  16. ihleventhal

    paultry Guest

    On 4/16/2011 3:51 PM, Alan wrote:

    > I once worked on assignment with a very large law firm hired to defend a
    > corporation in an antitrust case. The law firm hired a very large number
    > of temporary staff during the discovery phase and pre-trial. In fact,
    > the temporary staff was larger than the permanent staff assigned by the
    > large firm and the corporation. Some of the hires were law students on
    > summer break. They were hired by the law firm and were referred to by
    > the associates as "interns." Othe hires were usually referred to as
    > temps. These workers took their direction from my team (the corporation)
    > and not the law firm. An assignment might be something like, get me a
    > copy of all the trial testimony and/or all depositions entered into the
    > record for Mr. John Doe, the plaintiffs expert witness. I want it by
    > next Monday. They received very little in the way of instructions as to
    > how, where and when to perform the job. They were given a login ID and
    > password to Lexis-Nexis. They could come and go as they pleased. They
    > could do their research in any manner they chose. Some used available
    > terminals, some used the law firm's library, others used the law library
    > at their school. They received no benefits and had no written contract.
    > They received a 1099.
    >


    The fact that the associates referred to these workers as
    "interns" doesn't make them such. It's hard to find a
    generally accepted definition of internship that doesn't
    include or imply training and supervision. I'd guess that
    your temp workers' SS-8 responses would differ greatly from
    the OP's daughter's.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    paultry, Apr 17, 2011
    #16
    1. Advertising

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