Yes, you daughter needs to file a return. She has to pay Self-employment tax which consist of Social Security and Medicare taxes for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.
To lower the amount she owes, she can deduct her business expenses. To be deductible, a business expense must be both ordinary and necessary.
An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. Irs.gov
To report her self employment income and expenses:
- Select Federal from the left menu.
- Go to Wages and Income then select Income and Expenses.
- Go to Self-employment income and expenses and click start. you'll be asked some general questions about your business. After you answer them, you’ll be taken to enter your Income and Expenses.
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