Need to Amend a dependent's return in Turbotax 2019

marcisikoff — Thu, 06 Aug 2020 19:10:52 GMT

Our LLC (taxed as partnership) paid my kids but if a dependent receives a 1099-MISC they do not have to pay self-employment if both parents are partners and they are. Turbotax does not ask this even though it handles my taxes.

How do I file a 1040X in TurboTax Premier if it doesn't even know this tax rule?

This is the IRS's rule:

"Child employed by parents. Payments for the services of a child under age 18 aren't subject to Social Security and Medicare taxes, if the business is a sole proprietorship or a partnership in which each partner is a parent of the child. Payments to a child under age 21 aren't subject to FUTA. Payments are subject to income tax withholding, regardless of the child's age.

Payments for the services of a child are subject to income tax withholding as well as Social Security, Medicare and FUTA taxes if they work for:

A corporation, even if it's controlled by the child's parent, or
A partnership, even if the child's parent is a partner, unless each partner is a parent of the child."

Source: https://www.irs.gov/newsroom/tax-treatment-for-family-members-working-in-the-family-business

Now, then, where in Turbotax can I find this so I can amend the return properly?

Re: Need to Amend a dependent's return in Turbotax 2019

Critter-3 — Thu, 06 Aug 2020 19:22:22 GMT

Oh you messed up ... you had to pay the kids as EMPLOYEES and issue them W-2 forms to get the FICA taxes waived. Since you paid them as independent contractors on form 1099-misc then the program handled it correctly.

"Child employed by parents. Payments for the services of a child under age 18 aren't subject to Social Security and Medicare taxes, if the business is a sole proprietorship or a partnership in which each partner is a parent of the child. Payments to a child under age 21 aren't subject to FUTA. Payments are subject to income tax withholding, regardless of the child's age." https://www.irs.gov/pub/irs-pdf/p15.pdf

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Need to Amend a dependent's return in Turbotax 2019

Re: Need to Amend a dependent's return in Turbotax 2019