Illinois state tax and 1099-K and no fed tax filing

[dwinkler62]

My daughter earned about $9000 that is reported on a 1099-K. She has no other income so does not have to file a fed 1040 but does have to file and Illinois 1040. How does she report this income on the Illinois 1040 if she does not a have federal form 1040?

[KrisD15]

That's a tricky question. 

What is the 1099-K reporting? 

If she EARNED it, she would most likely need to file a Federal Return as a Self-Employed Taxpayer. The threshold for earnings for a Self-Employed Taxpayer (Dependent or not) is $400 for a Federal return. 

If it is Unearned, such as selling her personal items on E-bay, that could also require Federal Filing (Unearned income of more than 1,150)

Please continue the question if you still need assistance, and if so, please include more information about the type of income the 1099-K is reporting. 

[dwinkler62]

She earned it through a dog walking service, so it is earned.  She is not required to file a Fed 1040 if she earns under $12,950, but Illinois requires that you file even if you did not file a Fed 1040 if you earn more than the state exemption of $2425. 

[KrisD15 · Accepted solution]

What you say is true, almost. 

Yes, the amount on the 1099-K is EARNED, however it is not a W-2, so she was not an employee. She did not have an employer to withhold and submit her FICA Taxes (Social Security) so she must file Schedule C and pay those taxes through her Federal Tax Return. 

She will also be allowed to claim any expenses she had in regards to the Dog Walking Business. 

Some of these apps, like Uber, handle the payments, but they are not employers, they don't withhold and pay tax. 

Again, it isn't so much the Income tax on the self-employment income, it is the Self-Employment (FICA) tax. 

Please see the section  of Pub 501 below:

Pub 501