1099-MISC for dependent completing research studies (box 3, other income only)

[klaus-libertus]

Versions of this question have been answered before, but I wanted to check for 2023 - as laws do change.

My 14-year-old child received a 1099-MISC for 2023 listing "Other Income" in box 3 as $942.00 (from participating in research studies). No federal income tax was withheld. We reside in PA.

My current understanding of handling this correctly is:

1) My child has to file their own PA tax return for this income to pay the state taxes on it.

2) This income cannot be reported on my (the parent) federal tax return - since it is not interest or dividends

3) My child has to file their own federal tax return with the 1099-MISC information but needs to state that someone can claim them as a dependent

However, it seems also that #3 above may not be necessary as the income in Box 3 on a 1099-MISC is not subject to self-employment tax? So is step 3 necessary? Could I still somehow include the income in my own federal return?

Thank you for your help and clarification of this weird tax situation.

[LeticiaF1]

You are correct, here is some more information regarding your situation:

1. Yes, your child is required to file a PA return.  Their rules are that if you have gross taxable income in excess of $33 during 2023, even if no tax is due with your PA return you have to file. Being a minor does not exempt your child from this requirement even if your child is still being claimed as a dependent by you.  Your child would still be required to file a PA return even if he/she is not required to file a federal return.  For more information see 2023 Pennsylvania Personal Income Tax Return Instructions.
2. You are correct, this income cannot be claimed in your return.  
3. Your child is not required to file a federal return, because the 1099-Misc income does not count as self-employment and because the income is below the filing requirements for filing a federal return.  See the following TurboTax help article: Do I need to file a federal return this year?

TurboTax calculates state returns based on the information that you enter for the federal return, in this case even if your child is not required to file, you could file a federal return if you wanted.  Make sure that when you are entering his information in My Info section that you mark the box for the question about him/her being claimed as a dependent.  

See the following TurboTax help articles about how to enter a Form 1099-Misc.  

Where do I enter a 1099-MISC?