Child acting and self-employment tax 1099-NEC

Forum|Forum|2 years ago
February 19, 2024
7 replies
59 views

Both of my children earned nonemployee compensation last year for acting. One was $1700 (minor age) and another was $550 (no longer a minor). The $1700 one got a 1099-NEC from his agency. The $550 one did not. Should both file taxes with this amount as hobby income or as self-employment? The $1700 one also got a W-2 for around $500 for residuals on a prior acting job. Each had total 2023 income less than $3000.

MinhT1

Level 15

Both your children are considered self-employed and have to file their own tax return as they have received more than $400 of self-employed income. The one getting $550 didn't receive a form 1099-NEC because it was less than $600, but he still has to report this income. The son receiving the form W-2 has to add it to his tax return.

If you claim them as your dependents, they have to indicate in their own returns that they can be claimed as a dependent by another taxpayer.

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jason100Author

Level 3

Thanks for your response. Should I file their taxes with this amount as (a) hobby income or (b) as self-employed - schedule C?

Vanessa A

Level 15

That would depend on the actions and intent of you or your children. If they are pursuing acting as a "career" or to make money, then this would be considered business activity and it would be reported on Schedule C. If it is reported on Schedule C, then you also be able to claim expenses associated with their acting careers.

If there is no intention of trying to make money or making this a career, for example, they just like to make YouTube videos for fun but then someone noticed them and asked them to appear in a commercial, this would be more hobby type income as there is no intent to make money on it and they are doing it mostly for personal satisfaction. If it falls into the hobby category, then expenses are not deductible unless you itemize the return.

Also, when something is reported as a hobby, if it generates a profit for 3 out of 5 years, then it is seen as a business and not a hobby. And vice versa as well. If it does not make a profit in 3 of out 5 years, then it is considered a hobby.

Hobby versus Business Income

To enter your self-employment income click the following:

Federal
Income and Expenses
Show More next to Self-Employment
Start or Revisit next to Self-Employment
Yes, to you have any self-employment income or expenses
Enter the type of self-employment work you do
Click through a few more screens and you will get to a screen that says "Your XX info"
Click Looks good
Then you will come to a screen that says Let's enter the income for your business. It will give you the option of 1099-NEC or Other self-employed income including the 1099K , cash and checks. Select the one that applies to you and hit continue
If you do not select one, it will not let you enter your income
Enter your self-employment income on the next screen

To enter as Hobby Income select the following: