My 17-year-old was paid 4K as a 1099 employee.
Can I put the whole thing in an IRA and not FILE taxes? Does it matter if I put it in a Roth or Regular IRA?
Do we need to file?
He has filed before but never owed because he has never made more than 6K.
Part 2- My 13- year old made 3K as a 1099 employee
What if I don't put it in an IRA, do we need to file his taxes?
He has never filed before.
Sorry they need to file their own returns and pay self employment tax on a 1099NEC even if they don't owe any regular income tax on it. Be sure on their return they check the box that they can be claimed as a dependent on someone else's return. Putting it in an IRA won't avoid the SE tax. Buts it's a good idea. For an IRA contribution. If you only have self-employment income you can only contribute up to your net profit reduced by the deduction allowed for one-half of your self-employment taxes. See IRS publication 590 http://www.irs.gov/pub/irs-pdf/p590a.pdf
Does a dependent need to file a tax return?
Do I need to file my own taxes if I'm a dependent?
Online is only good for 1 return per account. But you can use the same email address for 5 accounts. How to start another return in the Online version
Or go to the IRS Free File programs
Free File: Do your Federal Taxes for Free | Internal Revenue Service
The Desktop CD/Download program can do unlimited returns and efile 5.
Your child who had self-employment income is required to file -- what he does with the money is irrelevant to that issue. He has to pay self-employment tax for Social Security and Medicare if he had even $400 of self-employment income. If he wants to put the money in a retirement account, that is fine, but it does not mean no self-employment tax.
https://ttlc.intuit.com/questions/2926899-how-does-my-side-job-affect-my-taxes
https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922
https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax
https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c
https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct
MY DEPENDENT HAD A JOB
If your dependent has a W-2 for his after-school job, summer job, etc. you do not include the information on your own return. You can still claim your child as a dependent on your own return. He/she can file his own return for a refund of some of his withheld wages (he won’t get back anything for Social Security or Medicare), but MUST indicate on it that he can be claimed as a dependent on someone else’s return. (Supervise this closely or prepare it for him!)
If your dependent’s earnings were over $400 and were reported on a 1099Misc or 1099NEC then he must file a return and pay self-employment tax for Social Security and Medicare.
You might also want to use free software from the IRS Free File versions:
https://apps.irs.gov/app/freeFile/
Sorry they need to file their own returns and pay self employment tax on a 1099NEC even if they don't owe any regular income tax on it. Be sure on their return they check the box that they can be claimed as a dependent on someone else's return. Putting it in an IRA won't avoid the SE tax. Buts it's a good idea. For an IRA contribution. If you only have self-employment income you can only contribute up to your net profit reduced by the deduction allowed for one-half of your self-employment taxes. See IRS publication 590 http://www.irs.gov/pub/irs-pdf/p590a.pdf
Does a dependent need to file a tax return?
Do I need to file my own taxes if I'm a dependent?
Online is only good for 1 return per account. But you can use the same email address for 5 accounts. How to start another return in the Online version
Or go to the IRS Free File programs
Free File: Do your Federal Taxes for Free | Internal Revenue Service
The Desktop CD/Download program can do unlimited returns and efile 5.
Hi There:
1099 income can be a wide range. But it feels as if you're referring to 1099 self employment income. Assuming this is the case, because of self employment taxes your children will have to file tax returns. Turbo Tax software can help. Please use the self employed module.
Hi KPL1970,
Thank you for this question. In both cases mentiion, It does appear from your question that both are being paid as self employed workers. Whenever the income exceeds $600, the IRS requires that a tax return be completed. It is possible that Social security and medicare taxes may be due on the amounts received as both are considered self-employed.