Our 16 year old daughter is our dependent. She made $8900 of income in 2021 by cashing out tokens she earned in RecRoom (a virtual reality, online video game). She is very artistic so she has been able to make a lot of 3-D inventions and rooms that people purchase in-game from her. She treats her RecRoom activity as a hobby and she does it mostly for fun and not for the money (she is currently a full time high school student). She received a 1099-SEC from RecRoom for her $8900 earnings (this is her ONLY income). I am confused as to whether or not she needs to file her own taxes. From what I read, money earned as a hobby is never considered "earned income" and if your gross income is less than $12,550 then you do not need to file taxes. HOWEVER, I also read that 1099-SEC is usually seen as "self-employment" income by the IRS and I believe that the IRS will expect you to file if you make >$400 in self-employment income. How do I answer the question in TurboTax "Is your child required to file?"
