My child received a 1099 on the sell of an animal she did for a FFA project. She had expenses related to the show. How do entered those expenses to itemize her deductions

[CatinaT1]

She will be considered a business in the IRS eyes.  You do not have to carry on regular full-time business activities to be considered self-employed.  She received non-employee compensation and will need to file a Schedule C for Business Income and Expenses and pay Self-Employment tax on this income.

To file a Schedule C, here are the steps:

1. Sign in to your account and select Pick up where you left off
2. At the right upper corner, in the search box, type in schedule C and Enter 
3. Select Jump to schedule C 
4. Follow prompts, you might be prompted to an upgrade if you have expenses

If you are claiming her on your return as a dependent, but sure to mark on her return that she is being claimed as a dependent.

[Opus 17]

No, 4-H and FFH is not a schedule C business.  It's an exception to the usual rules. 

There are two ways you can enter this income, however, since Turbotax changed the 1099-MISC interview, I'm not sure the best way any more.

1. Don't enter the 1099-MISC at all.  Enter the net income after expenses as "other income".  File by mail, and attach a copy of the 1099-MISC, and a written explanation including a list of expenses to show how you determined the amount of taxable income.

2. Enter the 1099-MISC as other income, not as a business.  If this is a 1099-NEC with income in box 1, you need to answer "no" to the question about deducting expenses, so you don't create a schedule C.  However, this may create other errors in the program.  If the income is in box 3 of a 1099-MISC, make sure to answer all the business testing questions as NO (not a business, not for profit, not similar to regular work).  After entering the full 1099 income, go back to the Other Income section and enter an item called "FFA expenses" that is a negative number, that will offset the income so only the net amount after expenses is reported as taxable.  You can e-file with this method, but keep records of your expenses and your explanation for at least 3 years in case of audit.

From IRS publication 525,

4-H Club or FFA project. If an individual par- ticipates in a 4-H Club or National FFA Organi- zation (FFA) project, any net income received from sales or prizes related to the project may be subject to income tax. Report the net income as “Other income” on Schedule 1 (Form 1040), line 8. If necessary, attach a statement showing the gross income and expenses. The net in- come may not be subject to SE tax if the project is primarily for educational purposes and not for profit, and is completed by the individual under the rules and economic restrictions of the spon- soring 4-H or FFA organization. Such a project is generally not considered a trade or business. For information on the filing requirements and other tax information for dependents, see Pub. 929.

[Opus 17]

More information:

Depending on your child's overall tax situation, they may not be required to file a return at all.  See this web site first.  Remember that FFA is "other income" or "other unearned income" and not business income.

https://www.irs.gov/help/ita/do-i-need-to-file-a-tax-return

Second, Turbotax may want to upgrade out of the free version to report other income.  As long as the child's income is less than $39,000, you can use the IRS FreeFile version, but you have to make a new account for the child and start over since it is a separate web site.

https://freefile.intuit.com

Lastly, because this is unearned income, it may subject your child to the "kiddie tax".  There's not much you can do about that if it happens.  More info is here.

https://ttlc.intuit.com/community/income/help/what-is-the-kiddie-tax/00/25913

[rdealy]

Is this still the case for 2022? I can't find anything in Pub 525 or anywhere else that specifically mentions FFA or 4-H. Thanks