topic The above answer was revised. in Education

My daughter is college student.I claimed her as dependent.she made $500 from selling art book and will donate all.Should she file tax return using Texas tax id for this?

cwqliu — Thu, 06 Jun 2019 14:16:20 GMT

My daughter already applied a Texas tax id (as part of the online art book selling requirement). How should we deal with her book sell and donation?(she will make $0 after donation).

She does NOT (probably) need to file a tax return. Unfort...

Hal_Al — Thu, 06 Jun 2019 14:16:22 GMT

She does NOT (probably) need to file a tax return. Unfortunately the tax system is ridiculously complicated. Hence, the "probably".

It’s unclear what the source of her income is. That is, what does “$500 from selling art book” mean? Several Copies of her art book?

Generally speaking, selling stuff on the internet means you are self employed and subject to self employment (social security and medicare) tax (SET), as well as income tax. However, if this a one time deal, she may report the income as other income, and avoid SET. Since her "other income" is less than $1050, she will not need to file a return. Even if it is self employment, if her expenses reduce the net income to less than $400, she will owe no tax and does not need to file a tax return. To complicate things further, the sale may actually be the sale of a capital asset (e.g. a valuable book), resulting in reporting the income as a capital gain. But again, the amount is below the filing threshold ($1050), so she still does not need to file a tax return.

If she does file a tax return, she uses her Social security number not the Texas ID #. That Texas # is for sales tax reporting.

The donation is essentially not relevant, for taxes. It does not reduce the amount of tax she has to pay. Charitable donations are only an itemized deduction. Since her standard deduction is bigger than the amount of her donation; she gets no additional tax benefit from making a donation. She cannot deduct the charitable donation as a “business expense”

The above answer was revised.

Hal_Al — Thu, 06 Jun 2019 14:16:23 GMT

The above answer was revised.

Since she made more than $400 she must file her own tax r...

Critter — Thu, 06 Jun 2019 14:16:26 GMT

Since she made more than $400 she must file her own tax return to report the income & expenses.

But make sure she indicates that she will be claimed as...

Critter — Thu, 06 Jun 2019 14:16:28 GMT

But make sure she indicates that she will be claimed as a dependent so she doesn't take her own exemption and mess up your return.

Can she file the tax return as personal or need to be bus...

cwqliu — Thu, 06 Jun 2019 14:16:30 GMT

Can she file the tax return as personal or need to be business because of tax id involved?

Unless she incorporated she will file a Sch C on the pers...

Critter — Thu, 06 Jun 2019 14:16:32 GMT

Unless she incorporated she will file a Sch C on the personal tax return.

If you have net self employment income of $400 or more you have to file a schedule C in your personal 1040 return for self employment business income. You may get a 1099-Misc for some of your income but you need to report all your income. So you need to keep your own good records. Here is some reading material……

IRS information on Self Employment….
<a rel="nofollow" target="_blank" href="http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center">http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center</a>

Publication 334, Tax Guide for Small Business
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p334.pdf">http://www.irs.gov/pub/irs-pdf/p334.pdf</a>

Publication 535 Business Expenses
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p535.pdf">http://www.irs.gov/pub/irs-pdf/p535.pdf</a>

That Texas tax ID is totally meaningless for federal inco...

Hal_Al — Thu, 06 Jun 2019 14:16:34 GMT

That Texas tax ID is totally meaningless for federal income tax purposes.
The feds issue their own Tax ID/EIN Number, for businesses. Schedule C filers can use the federal EIN, but most just use their Social security number.
It's still not clear that your daughter even needs to file a Sch C. Selling one valuable book on line does not constitute business activity, unless she is actively trying to sell other items. Selling copies of a self published book would constitute a business.