Thread: 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?

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.

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