My dependent made $8000 income in 2020

Forum|Forum|5 years ago
April 3, 2021
6 replies
17 views

To clarify, she was paid $3200 via 1099-NCE for sporadic contract work.

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Carl

Level 11

Not sure what your question is, since you didn't specifically ask a question. maybe this will help.

Your dependent is required to file their own tax return. Assuming they are under the age of 19 on Dec 31 of the tax year, *OR* a full time student in 2020 for any one semester that started in 2020 and under the age of 24 on Dec 31 of the tax year, your dependent is *required* to select the option for "I can be claimed on someone else's tax return" when your dependent is completing their own tax return.

You the parent will still claim that dependent on your own tax return.

Mike9241

Level 15

if your dependent was over 19 and not a student or over 24 and a student, you can not claim them as a dependent - too much income.

Mike9241

NCperson

Level 15

here is an easier way - because the rules are so complex...just fill out this 5 minute IRS tooliu

it will provide the answer:

https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent

@Mike9241 - while I agree your answer is broadly correct, it infers that if the dependent is between 19 and 24 years old AND a student the individual is still a dependent, but that is only true if 'student' is more than a 'half time' student, is US citizen, has a SS#, etc... so best to use the IRS Tool for completeness

NCperson

Level 15

what's the question?

Carl

Level 11

Also, since the "sporadic contract work" is self-employment income in the eyes of the IRS, they are required to file a tax return since the amount of self-employment income earned was more than $400. While they will not pay "regular" tax on their total income for the tax year since it was less than $12,400, they will definitely pay the 15.3% self-employment tax on the $3,200 earned while self-employed.

Note that the $3,200 will be reported on SCH C where they can deduct any business related expenses from that amount, thus reducing the amount of self-employment income they have to pay that 15.3% SE tax on.