I received a 1099, but I don't think the work I did qualifies?

Question

I did an internship over the summer and received a stipend that was considered a 1099. However, the funds were used to purchase my flight, etc., and I didn't actually make any money off of it. I actually lost money! I'm using TurboTax and now find that I have to pay some large sum of money and that I'm considered a business but am a broke student. Is there any way to get out of this? Am I doing something wrong? Would appreciate any advice. Tax day is soon...

Answer 1

If you did receive a 1099 you do have to report the income on it, and depending on what the income was for you may or may not have to pay self-employment taxes on it. But, from saying that actually lost money on it, your best bet seems to be to report the 1099 income on a Schedule C for your 1040 return. That way you can also report on that Schedule C any expenses, such as the purchase of the flight, that you had while earning that money. If you did indeed lose money on the 1099 income, then you shouldn't end up owing tax on that income then.

Answer 2

You can deduct eligible expenses from the 1099 income on your schedule C or C-EZ. You only pay taxes on the net. Turbo Tax lets you enter expenses. But be sure they're proper - if the plane fare was for you to get to the job, it probably isn't deductible - same for living expenses while you were there.