1099-NEC for dependent children

In order to eliminate the 8615 and report her 1099-NEC as self-employment income, you must answer the questions following the entry of her 1099-NEC so it flows to a Schedule C (self-employment income). 

Please follow the steps below: 

1. Open your return.
2. Search for 1099-NEC with the magnifying glass tool at the top of the page.
3. Click on the Jump to 1099-NEC link at the top of the search results. 
4. Click Edit next to the 1099-NEC. 
5. Continue past the information entered.  
6. On the page titled Guess what? You can deduct expenses for the example work choose Yes, I have expenses to deduct. 
7. On the page titled Self-employed 1099-NEC Income, you can add a new Schedule C business on this screen.

To confirm your 1099-NEC was linked to your Schedule C, please follow the instructions below:

1. Open your return.
2. Search for Sch C with the magnifying glass tool at the top of the page.
3. Click on the Jump to Sch C link at the top of the search results. 
4. On the page titled Your 2020 self-employed work summary, you should see the 1099-NEC listed with the corresponding amount. 
5. Click review next to the income from your 1099-NEC. 
6. Follow the on-screen instructions on the following pages. 

It looks like I can only add 1099-NEC under either my husband's or my name on Turbo Tax. The 1099-NEC was belong to my high school son who made money out of reffing sports games last year. How should I add under his name? Based on what you said, we have to create a business, so it's him?

It looks like I can only add 1099-NEC under either my husband's or my name on Turbo Tax. The 1099-NEC was belong to my high school son who made money out of reffing sports games last year. How should I add under his name? Based on what you said, we have to create a business, so it's him?

You do not add your son's earned income on your tax return.  He has to file his own tax return and since the income is from a 1099-NEC, he will include a business Schedule C on his return.  You can still claim him as a dependent on your tax return.   But when he completes his tax return (or you do it for him) make sure that the ''someone else can and will claim me'' boxes are checked.   This will ensure no one's return gets rejected.    @EllieWS

The income he earned while refereeing games is considered self-employment.   He is, for tax purposes, the owner of his own business.  He can deduct expenses related to that income on Schedule C.   When setting up the 'business' in TurboTax, he can use his own name and address for the business which keeps it simple.   

Even if you're a dependent, you'll generally need to file your own 2020 tax return if:

• Your earned income (money you made by working) exceeds $12,400
• Your unearned income (interest, dividends, capital gains, etc.) exceeds $1,100
• Your business or self-employment net income (gross minus expenses) is at least $400 
• Your gross income (earned plus unearned) exceeds the larger of $1,100 or your earned income (up to $12,050) plus $350

Thank you, Dawn! Now I think I understand. @DawnC 

One more follow up question for you to make sure that I understand this correctly. 

I later found out a place to enter Child's income, but for some reason it said that I didn't need to report that as it was below $1,100. But if I understand you correctly, income from1099-NEC is considered as self-employment, so if the net income is over $400, my son should file a separate report by himself, right? But when his gross income is less than $1,100, even if his self employment net income is more than $400, he doesn't need to file his own tax return, right? @DawnC 

The place you found to ''enter your child's income on your return'' is only for unearned income, not for earned income.  If the unearned income was less than $1100 and that was the only income (had no self-employment) you would not have to report it on any tax return.  

But since self-employment requires a tax return, he should include all his income, both earned and unearned on his own tax return.   

You were good there until the last sentence.   If his gross income is less than $1100 and that was his only income, he would not need to file.   But if he has more than $400 in self-employment, he still has to file a return.   Self-employment is earned income.      @EllieWS

Thank you for your clarification, Dawn! Very helpful. @DawnC 

Can mileage be deducting for transporting minor child?  Child is a model and we drive quite a few miles to get her to her photoshoots.  The vehicle is not hers so not sure if deducting mileage is possible.

No, she cannot deduct the mileage on her return for you transporting her to photoshoots and such.  She would have to own the vehicle to deduct mileage. 

You cannot deduct the mileage on your return either as you are not earning the income. 

Thank you.  What about hotel stays?

To follow-up on the comments from @Vanessa A, the hotel stays would not be deductible by you either because it does not appear to be your business expense, but rather a business expense belonging to your minor child.  If you minor child filed their own respective return, then your minor child could include their business expenses on their respective return.  Those expenses could include the mileage and hotel stays provided the minor child paid for those expenses in connection with the modeling work.  

@jhollifi

Thanks for the follow-up information.  My minor child will file her own tax return.  Just wasn't sure if mileage could be deducted since she didn't own the vehicle.  As far as hotels, I paid with my credit card but reimbursed those expenses from my child's income received.

The only way she can claim the mileage would be if she paid you for the mileage, then you would need to count this payment as income and report it as income on your return. If she is paying for gas or tolls, then she can claim those expenses, but for actual mileage, she needs to own the vehicle.

It may be a good idea to open an account for your child with a card attached so you can pay the expenses such as hotel rooms and fuel costs directly from her account.  That way you have all expenses and income in one account to make it easier for tracking purposes and the waters don't get muddied.

I just want to make sure I fully understand this based on your previous responses.  My minor earned $1875 for being a referee (received a 1099-NEC for this amount) and earned $3912.75 on a W-2 from a second job.  She will need to file her own return (I already claimed her on mine so I will need to note that) and follow prompts for self employeed?  It just seems very high for a 16 year old to have to pay over $200 in taxes AND pay almost $90 for filing.  Just want to make sure we are doing this correctly.  Thank you

The self-employment income is subject to self-employment (social security) tax of close to 15% on the net income from self-employment. So the minimum tax would be over $200. You can deduct any expenses that are ordinary and necessary for the service performed. Also, there are a couple extra forms that need to be prepared when you are self-employed, that is why the tax product costs more.

@Anonymous   Yes you have that right.

if a minor receives a 1099 NEC is that supposed to be reported

Yes,   If you got a 1099Misc or 1099NEC you have to file it as self employment income no matter how small the amount.

To file a separate return as a dependent you need to set up a new account separate from your parents. Online is only good for one return per account. You can use the same email address for 5 accounts. You can probably use the Free Edition or the Free File website
https://ttlc.intuit.com/community/using-turbotax/help/how-do-i-start-another-return-in-turbotax-online/00/25596

Be sure on your return you check the box that says you can be claimed on someone else’s return. If your only income is W2 and under 12,400 you do not have to file a return except to get back any withholding taken out.

Filing requirements for a dependent
https://ttlc.intuit.com/community/children-dependents/help/do-i-need-to-file-my-own-taxes-if-i-m-a-dependent/00/26111

I'm a little confused between earned income and business income. My 20 yr old daughter got a 1099 NEC for $4500. Do I file taxes for her or not?

Yes, if she received more than $400 as an independent contractor, she will need to file a tax return. 

Yes business income is earned income.  Actually the Net Profit on Schedule C is the amount of earned income.  Even there is no income tax on 12,550 or less she still owes self employment tax on it.

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit (If it is greater than $400).  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.