Having interns, paid or unpaid, is complicated.

The NonProfit Times recently featured an article titled "The Cost Of Unpaid Interns-How to navigate the wage and hour law maze", which looked at the issue of unpaid interns and whether it is legal for nonprofit organizations to have interns that are not compensated for their work.

It mainly comes down to whether the federal Fair Labor Standards Act (FLSA) are applicable to your organization. Determining this can be complicated, and it in part deals with whether the intern could be considered a "trainee" which means the FLSA doesn't apply to them and they do not need to be paid. The article lists a six-part test to determine whether your unpaid intern could be considered a "trainee", to read the article and learn more about the test click here.

So, maybe after reading this you have decided your intern needs to be paid. Or maybe your interns are already paid. Regardless, having paid interns brings up another dilemma- how is their income taxed? Well, every organization does this differently. Some treat interns like regular employees and tax their income as such, others treat interns like independent contractors and mail them 1099s. There are also some nonprofits that do neither- they just hand them a check and shirk any responsibility with the IRS and that intern's taxes (which is a mistake). It's hard to say what the best way to do this is, and the IRS doesn't seem to care much about how your intern is classified as long as taxes are paid on their stipend or wages. So I would just recommend that you pick a way and document why you chose to pay interns the way you do.

I also would like to add that having interns is not only extremely useful for your organization, but it is also very helpful for the intern. It is a win-win situation, the intern gains valuable experience and you gain an unpaid (or very underpaid) worker. So, don't let this complexity discourage you from hiring interns.