I have a very small business which is a single-member LLC. It's a blog and brought in about $5k in income in 2021.
I hired my 11-year-old daughter to model for photos I needed to use in various blog posts throughout the year. Over the course of the year, her earned income totaled $400 from 8 photo sessions at $50 per session. She had no other income from any other sources. Probably an aside, but all the money was paid to her from the business, and then she invested that money in a custodial Roth IRA.
Here are my questions:
- Is she an employee or an independent contractor? What's a smarter move if there's a choice?
- What do I need to do to ensure everything is done correctly?
- Do I need to issue her a W2 or 1099? If that's past due (from what I was told), what happens?
- Will she need to file a return this year? I've heard that it's probably good to do this regardless to ensure something is in place to record
- We didn't do this in 2021, but does she need to be making estimated quarterly tax payments in the future if she earns more income in 2022?
- Assuming her income is small again like this in 2022, what are my obligations and hers as far as other taxes (Social Security, Medicare, FICA, etc.)
Sorry for all the questions, but this is something completely new to me.
Thanks for your help!
