Dependent child's 1099-NEC

[psk1]

Shall I file my dependent's 1099-NEC and INT income on my return or shall I file her returns independently? When I tried it on Turbotax desktop version, it said, you may have to file with parents' returns. But when I tried to enter on my file, tax rate is quite high. Not sure what is the right approach? Could someone please help? 

[AnnetteB6 · Accepted solution]

If your dependent child has received income reported on Form 1099-NEC, you cannot include that income on your return.  It will need to be included on your child's own return along with the Form 1099-INT that you mentioned.

Certain unearned income such as only dividends and interest may be reported on your return on behalf of your dependent, but earned income such as the Form 1099-NEC cannot.  

In general, if the Form 1099-NEC income minus any applicable expenses are greater than $400, then a return will be required to be filed.  Take a look at the following TurboTax help article to see the other income threshold amounts to verify whether or not a return is required to be filed for your dependent:

Do I need to file my own taxes if I'm a dependent?

[psk1]

Thank you.

[Opus 17]

Sometimes, if a child's only income is interest and dividends, it can be added to a parent's return.

If there is any other kind of income, then all the child's income must be reported on a tax return in the child's name.  

1099-NEC is generally self-employment income, such as being an independent contractor rather than an employee.  Sometimes, payers use the wrong form. If you have concerns that your child was not self-employed, let us know more details. 

[13mmwoods]

Dependent daughter worked as a summer camp counselor June-Aug 2022. She was paid $1200 but didn't know she'd be paid until the end of camp - she thought she'd probably just be volunteering. She received a 1099-NEC for the $1200. We claimed her as our dependent, but now don't know how to file this for her own taxes..HELP!

[AliciaP1]

She should technically report this as sporadic income on her own return for 2022, that she would mark she was claimed as a dependent by another person.  If she has any expenses she may be able to claim against the income (see What self-employed expenses can I deduct? for help with these) she should report the income as self-employment income and deduct the expenses to reduce her tax liability.

If she has to report the income as sporadic income you can follow these steps to enter it into TurboTax Online:

1. Go to the Income & Expenses section of your tax return
2. Click Edit/Add for your form 1099-NEC
3. Input the details of your 1099-NEC and click Continue
4. Answer the questions and Continue until you get to the Does one of these uncommon situations apply? page
5. Choose This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common) and click Continue

@13mmwoods 

[Opus 17]

She needs to file her own return.  Income from working is never reported on a parent's return, even if the person is a dependent.  (And, small amounts do not disturb the parent's ability to claim the child as a dependent.)   

So it's ok to claim her as a dependent, but she will need to file a return to report the income.  

[dawnschen]

@Opus 17 

May I ask a related question?

Last year (for year 2022)  using turbo tax, I filed my daughter's own return and parent's return.  However, I did not claim her as my dependent.  May I make amend for 2022 for the parents return?

The income from her part time jobs (~15k) is never reported on a parent's return since I did not mentioned she as a dependent. 

Also wondering how much the limit of year 2022 for the small amounts that do not disturb the parent's ability to claim the child as a dependent

Thanks.

Best

dawn

[Opus 17]

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@dawnschen wrote:

@Opus 17 

May I ask a related question?

Last year (for year 2022)  using turbo tax, I filed my daughter's own return and parent's return.  However, I did not claim her as my dependent.  May I make amend for 2022 for the parents return?

The income from her part time jobs (~15k) is never reported on a parent's return since I did not mentioned she as a dependent. 

Also wondering how much the limit of year 2022 for the small amounts that do not disturb the parent's ability to claim the child as a dependent

Thanks.

Best

dawn

---

Your return:

You always have the option of not claiming a child who would otherwise qualify.  There aren't very many times where this is a good idea, but it's an option. The main situation is when your child is in college and your income is too high to claim college tuition credits.  Sometimes, if your child can be claimed as a dependent but you choose not to, the child can claim the tuition credits.  

Your child can be claimed as a dependent under one of two tests.

Qualifying child:  Your child is under age 19, or under age 24 and a full time student; lives at home more than half the year; and does not provide more than half their own support.  The child's total support includes a share of your rent or mortgage, household expenses, food, medical care, travel, entertainment, clothes, and other things you provide.  A child's part-time income will rarely provide enough support to be more than half the child's total support once you add it all up, so a child having a job will usually not prevent you from claiming them.  For "lives at home", the child is considered to live at home during temporary absences such as college, unless they have permanently and totally moved out and established there own place.

Qualifying relative.  Your child can be a qualifying relative at any age, and live anywhere, so long as you provide more than half their total financial support and their gross taxable income is less than $4700.

Your child's return:

Income earned from working is only ever reported on the child's return in their own name.  However, if the child can be claimed as a dependent (meets the qualifications for either test), then the child must answer "Yes, I can be claimed as a dependent" even if the person who could claim them has decided not to claim them.  For college students, there is a second question, "Will the person who could claim you, actually claim you this year?"   If the child can be claimed, but answers that they won't be claimed, they may be eligible for certain college tuition credits. 

Amending

Instructions to amend a return can be found here.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-return/amend-change-correct-return-a...

For a child age 16 or less as of December 31 of the tax year, there is a child tax credit of up to $2000.  For a child age 17 or older, the dependent credit is $500.  If you amend to claim the child, but your child answered "No-one else can claim me as a dependent", then your child might also need to file an amended return to change their answer.