Internship Stipends and 1099 Tax Filing Guidance

Many advocacy organizations and training programs offer internships that pay participants stipends or hourly wages. For tax purposes, these earnings are often classified as self-employment income. Filing taxes using a 1099 may be unfamiliar territory for many. Despite programs providing tax preparation information and training, youth and young adults report being caught off guard when it’s time to pay their self-employment taxes.

1.  Program participants prefer training provided by an organization’s in-house staff, someone the interns are familiar with and trust. This in-house person can then be available to assist with issues and questions after the training is completed and tax time approaches.
2. What is the difference between a W-2 and 1099 when it comes to filing income taxes?
   1. How to read a 1099?
      1. When will interns receive the 1099?
      1. How will they receive the 1099: email attachment, post mail?
3. How much money will the intern need to save to pay 1099 taxes?
   1. How do you calculate self-employment tax?
      1. Provide a worksheet that can be used to practice examples calculating self-employment tax, either as a group, in pairs, or individually.
      1. Guide each individual to determine the estimated amount of taxes that they will need to pay.
   1. Encourage interns to create a plan to save the money they will need to pay the taxes.
4. Provide information on free tax preparation services in your area, such as public libraries and other community-based organizations.
5. This trusted site can be used to file taxes on their own for free.
   1.  https://myfreetaxes.com/

Internships that pay an hourly wage may consider hiring the interns as regular, temporary employees receiving W-2 earnings alleviating the 1099 self-employment tax filing burden and providing the status of employee for their résumés. In addition, as organizations acknowledge the value of the lived experience youth and young adult advisors bring to program evaluation and planning, identifying them as regular employees can also elevate the value experienced by youth and young adults: reinforcing their experience as valued members of your organizations team.