My children ages 11, 13 and 19 (as of Dec 31 2020) did some work for my education business (S-Corp) in 2020.
I compensated them $1000, $1500 and $2000 respectively and issued 1099-NEC for each of them. They did not have any other income.
1. Do I need to file tax forms for each of them?
- If yes, what form should I use?
- what would be the tax liability? Is there a penalty for filing only by Sept 15th?
- can I still claim them as dependents on my tax form?
2. Can I include their income in my 1040 tax return?
- Do I just include their 1099-NEC amounts like I do with my/my spouse's income?
- Do I then pay highest bracket taxes on those amounts?
- Is it any different treatment for my minor kids vs 19 year old?
Is there a better way of handling such payments to children in future years?
Thank you!
