Okay so this is now confusing because someone else on a another topic mentioned that W-2's are not required if there are no tax withholdings. So if my minor daughter is paid $3000 for services she renders to a family business (Single member LLC), then she isn't subject to any FICA/FUTA/income taxes at the federal level and no SUTA/incomes tax at the state level (Georgia). So in this case there's no withholding either. All taxes are 0, is there still a W-2 required to be issued here (the business has no other w-2 employees)? If one did not issue a W-2 what's the penalty or solution?
My understanding is that since there are no taxes paid by the minor or employer at all there's no W-2 required, the only reason to issue a W-2 would be if the child wants to make a contribution to a IRA or Roth IRA in which case the IRS system would look for earned income (W-2) to match the form 5498 that will be issued to the minor.
And on this related topic if one does issue a W-2 to the minor, would I need to file a separate tax return for the minor or is there a way to report it the minor's W-2 (again no taxable income) as part of my tax returns. Also, if I need to file a separate tax return for her (with no taxable income but still have to report the 5498), can I claim her as a dependent on my tax returns?
