My child received a 1099 from a national sports organization for quarterly grants to support his adaptive sports (he is disabled). So last year he filed as self-employed but I set up a business in my name since I was going to help him with taxes. How should he handle this and what if he wins some money (usually like $25-$75) from winning a tournament. That is reported as income, correct even though we don't get any paperwork...
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$25-$75 may not meet the filing requirement for filing a Federal 1040. See IRS Publication 17, page 8 which states:
You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and age (shown in Table 1-1).
Also, you must file Form 1040 or 1040-SR and Schedule SE (Form 1040), Self-Employment Tax, if:
1. Your net earnings from self-employment (excluding church employee income) were $400 or more.
He receives about $8000 a year in grants so I was wondering if since he is now 'self-employed' 1099-NEC if those winnings need to be reported as income for his sports career 'business'.
Yes, the winnings are associated with the business activity so they should be reported along with the $8,000 as business income.
Thank you. And can I still use my business that I created to report his winnings since he gives them to me to use for him playing the sport? Then I pay taxes on them and write off what I spend for his sports and he just pays taxes on his grant?
That's just fine.
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