Do Internships Get Taxed? What HR & Mobility Teams Need to Know
Internship programs are a valuable pipeline for early talent but they also come with tax, compliance, and reporting obligations that many organizations overlook. At Orion Mobility, we work closely with HR leaders and global mobility teams to streamline internship-related expenses, ensure compliance, and help employers optimize tax efficiency.
In this guide, we answer common tax questions about internships from an employer perspective.
Are Paid Internships Taxable?
Yes. Paid interns are subject to the same federal and state payroll tax requirements as other employees. This includes:
Reporting of all wages and other income, including taxable moving expenses paid by their employer.
Withholding for federal income tax, Social Security, and Medicare (FICA)
Proper classification as W-2 employees (unless the role truly qualifies as 1099)
Issuance of year-end tax forms (W-2 or 1099-NEC)
Tip for HR: Misclassification of interns as independent contractors can lead to costly audits and penalties. Ensure your intern roles pass the employee classification test.
Are Unpaid Internships Taxable?
No wages = no payroll taxes. However, certain benefits such as paid moving expenses are considered taxable income to the intern and must be reported on their W-2. In addition, unpaid interns must meet strict Department of Labor guidelines to qualify as unpaid. If the company is the primary beneficiary of the work (rather than the intern), the role must be paid.
Risk Alert: Mislabeling unpaid internships can trigger wage claims and legal exposure. Ensure your unpaid programs are educational in nature and compliant with FLSA guidelines.
Can Companies Write Off Interns on Taxes?
Not as a direct “internship deduction,” but:
Wages paid to interns are deductible as a standard business expense
Some employers may qualify for tax credits, such as the Work Opportunity Tax Credit (WOTC), if interns meet certain criteria
Costs related to relocation, housing stipends, or international assignments may also be managed in a tax-efficient way
Partner Opportunity: Orion Mobility works with companies to structure relocation reimbursements and internship expense programs in ways that are compliant and cost-effective.
What About Interns on International Assignments?
Global internships introduce layers of complexity, including:
Tax residency status
Host-country payroll rules
Visa and immigration requirements
Expense reimbursements and tax equalization
Whether you're moving interns into or out of the U.S., Orion Mobility helps ensure your program is globally compliant and your interns are set up for success.
Support for Your Internship Program
Internship programs can be strategic, cost-effective, and compliant—with the right support.
At Orion Mobility, we partner with HR and global mobility teams to:
Structure compliant internship compensation and reimbursements
Support cross-border internship assignments
Manage global tax obligations
Eliminate business expense boundaries
Let’s talk about how we can help you build a world-class internship program—without the tax and compliance headaches.