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Level 1

What is the standard deduction for a single dependent who is also self-employed?

I'm 21 years old, a full-time college student, and can be claimed as a dependent on my parent's tax forms (I live in Arizona, btw). Last year, I made around $5,400 total, working as a driver for both DoorDash and Postmates. However, I am unfamiliar with how to pay taxes and my parents keep telling me that I don't have to worry about it, but I beg to differ. I also talked to a tax expert earlier today and said that being a dependent can hurt my standard deduction. I am already aware of what forms to use to report my earnings and what my expenses are, but I just want to know, would my standard deduction be like $1,100.00, or would it be my earned income + $350 (as long as it does not exceed $12,200.00)??? I'm just so confused....

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Level 15

What is the standard deduction for a single dependent who is also self-employed?

The  standard deduction for a dependent is the GREATER of $1100 or your earned income + $350 . In your case you standard deduction is $5750.  TurboTax automatically calculates that for you.

 

this assumes that the $5400 is your net self employment income, after deduction all your expenses. 

 

You parents are half right, you do not need to worry about income tax, whether you are a dependent or not.   But you will have to pay self employment tax (social security and medicare tax) on your net self employment income (about 14% net). Your self employment tax  (SET)is the same whether you are a dependent or not.   Your standard deduction does not help reduce SET.

 

With the tax law change, effective 2018, most students will get the same refund whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction increased.

 

 

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Expert Alumni

What is the standard deduction for a single dependent who is also self-employed?

In your case, the standard deduction will be your earned income (which is your net self-employed income from DoorDash and Postmates) + $350, with a maximum of $12,200.

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Highlighted
Level 15

What is the standard deduction for a single dependent who is also self-employed?

The  standard deduction for a dependent is the GREATER of $1100 or your earned income + $350 . In your case you standard deduction is $5750.  TurboTax automatically calculates that for you.

 

this assumes that the $5400 is your net self employment income, after deduction all your expenses. 

 

You parents are half right, you do not need to worry about income tax, whether you are a dependent or not.   But you will have to pay self employment tax (social security and medicare tax) on your net self employment income (about 14% net). Your self employment tax  (SET)is the same whether you are a dependent or not.   Your standard deduction does not help reduce SET.

 

With the tax law change, effective 2018, most students will get the same refund whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction increased.

 

 

View solution in original post

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