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mpf5030 · 09-30-2009, 07:52 PM

A friend of mine was telling me the other day about his summer Internship that he had at the Department of Energy. He was telling me he made about $7000 total over the summer but no taxes where withheld from his paychecks, which is weird to me especially since he worked for the people who want the taxes. But that is besides the point, he said it sucks because he is gonna own like a grand in taxes when he files. I said he definitely does not owe that much, if any at all.

He is a 20 year old Full-time college student, and dependent of his parents

$5700 should be automatically exempt for the standard deduction of a single person, leaving just $1300. He doesn't get a Personal Exemption because he is claimed by his parents, but what other deductions could he potentially have? Does the Kiddie tax first $950 clause only apply to passive income, or would it be included bringing us down to only $350. He would taxes at the 10% bracket meaning the max he should pay is $130 or are there penalties for withholding too little?

Helse · 10-11-2009, 03:51 AM

Liability for US income tax: ? $7000
Less "above the line" deductions
Liability or 1040 filing US income taxes: unlikely

If classified as I.C., expect 1099 with S.E. Tax ramifications.

If Employee, less than $8,950.00 see:
http://www.irs.gov/individuals/artic...=96644,00.html

"Do You Need to File a Federal Income Tax Return?
Based on the information provided, you do not need to file a Federal Income
Tax return for this year unless you need to receive a refund of payments already made."
Do You Need to File a Federal Income Tax Return?
http://www.irs.gov/individuals/artic...=96650,00.html

Lilycanhelp · 01-21-2010, 08:31 PM

Hi,

If your friend received a 1099 from his employer for $7,000, he is basically considered a self employed person and will file a schedule C to report his income. On the Schedule C, he will also be able to deduct expenses that he incurred as he earned his income. For example, auto,
cell phone.

He will be able to deduct the expenses against the income. Let's say his expenses were $3,000, then he will net $4,000 of which he will have to pay self employment taxes which are the FICA taxes (7.65% x 2 = $15.3 %.) $4000 x 15.3% = $612. (Federal)

He will probably owe a nominal amount for the state.

Pat · 01-22-2010, 06:45 AM

Highly probable that a summer intern would have W-2 wages instead of a 1099 income as an Independent Contractor.

09-30-2009, 07:52 PM	#1 (permalink)
mpf5030 Status: n00b Join Date: Sep 2009 Location: PA Posts: 4 Rep Power: 0	Individual Tax Question A friend of mine was telling me the other day about his summer Internship that he had at the Department of Energy. He was telling me he made about $7000 total over the summer but no taxes where withheld from his paychecks, which is weird to me especially since he worked for the people who want the taxes. But that is besides the point, he said it sucks because he is gonna own like a grand in taxes when he files. I said he definitely does not owe that much, if any at all. He is a 20 year old Full-time college student, and dependent of his parents $5700 should be automatically exempt for the standard deduction of a single person, leaving just $1300. He doesn't get a Personal Exemption because he is claimed by his parents, but what other deductions could he potentially have? Does the Kiddie tax first $950 clause only apply to passive income, or would it be included bringing us down to only $350. He would taxes at the 10% bracket meaning the max he should pay is $130 or are there penalties for withholding too little?

10-11-2009, 03:51 AM	#2 (permalink)
Helse Status: Moderator Join Date: Dec 2008 Posts: 610 Blog Entries: 11 Rep Power: 32	Income Limit; US 1040 Return; $8950 Liability for US income tax: ? $7000 Less "above the line" deductions Liability or 1040 filing US income taxes: unlikely If classified as I.C., expect 1099 with S.E. Tax ramifications. If Employee, less than $8,950.00 see: http://www.irs.gov/individuals/artic...=96644,00.html "Do You Need to File a Federal Income Tax Return? Based on the information provided, you do not need to file a Federal Income Tax return for this year unless you need to receive a refund of payments already made." Do You Need to File a Federal Income Tax Return? http://www.irs.gov/individuals/artic...=96650,00.html __________________ Last edited by Helse; 10-11-2009 at 04:02 AM..

01-21-2010, 08:31 PM	#3 (permalink)
Lilycanhelp Status: n00b Join Date: Jan 2010 Posts: 1 Rep Power: 0	Self Employed income Hi, If your friend received a 1099 from his employer for $7,000, he is basically considered a self employed person and will file a schedule C to report his income. On the Schedule C, he will also be able to deduct expenses that he incurred as he earned his income. For example, auto, cell phone. He will be able to deduct the expenses against the income. Let's say his expenses were $3,000, then he will net $4,000 of which he will have to pay self employment taxes which are the FICA taxes (7.65% x 2 = $15.3 %.) $4000 x 15.3% = $612. (Federal) He will probably owe a nominal amount for the state.

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01-22-2010, 06:45 AM	#4 (permalink)
Pat Status: Moderator Join Date: Apr 2009 Location: USA Posts: 152 Rep Power: 19	Highly probable that a summer intern would have W-2 wages instead of a 1099 income as an Independent Contractor.

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