NotLearnedHand,
There are several questions you pose.
(1) Is money reported via 1099-NEC self-employment income? Answer: yes. See https://www.irs.gov/government-entities/indian-tribal-governments/itg-faq-2-answer-what-income-is-co...
(2) What is the standard deduction of a dependent? Answer: the maximum of $1,100 or (earned income + $350) but no more than $12,550. Also, the IRS instructions for form 1040 states:
| You must file a return if any of the following apply. |
• Your unearned income was over $1,100.
• Your earned income was over $12,550.
• Your gross income was more than the larger of— |
• $1,100, or
• Your earned income (up to $12,200) plus $350 |
Do taxpayers with self-employed income owe self-employment tax? Answer: yes if net self-employment earnings are at least $400. This is the government's way of collecting social security and medicare tax on all earned income. If your son had gotten a W-2, it would show those taxes taken out of his gross pay. Being self-employed, he has to cough up the equivalent, actually twice as much because he pays both the employee and employers share.
Bottom line: From the information you have provided, TurboTax has followed the correct procedure. It also subtracts half of that self-employment tax from his income, a small gesture, to be sure.
