do I need to issue 1099 to my kid

[zymxhjjtm197227]

Hi My older kid has been babysitting my younger kid and mowing our yards and get paid from us. DO I need to issue 1099 to him? is this considered as his earned income? thanks

[xmasbaby0]

You are not a business owner so you do not issue a 1099NEC to your own child for babysitting or cutting grass.   It sounds more like you are giving your older kid an allowance for family chores.   You cannot claim the childcare  credit on your own tax return for paying your own dependent for babysitting, if that was on your mind.  

[zymxhjjtm197227]

Hi thanks for the clarification. then does the payment my kid received for those chores considered as his earned income?

[xmasbaby0]

What is this about----are you looking for a way for your child to have earned income in order to start a retirement account?   

If you want your child to consider the babysitting/lawn mowing money to be considered earned income, then if your child  made at least $400, he can file a tax return and pay self-employment income tax on his earnings. He will be considered to be an independent contractor and will pay 15.3% for Social Security and Medicare.   He does not have to receive a 1099 from you to do this. The earnings can be entered as self-employment income without a document.

https://ttlc.intuit.com/questions/2903027-how-do-i-report-income-from-self-employment

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

As the parent paying the child, you derive no tax benefits or credits for your own tax return.

[zymxhjjtm197227]

thanks, that's what I am planning to do. Also does my kid need to have earned income to claim education credits

[xmasbaby0]

If your child is your dependent then YOU are the one who gets the education credits.  You have provided no details--only that he is your "older" child who helps out by babysitting a younger sibling and cutting grass.

How old is your son?   Is he a full-time student?   Did he have any other income earned from working?

WHO CAN I CLAIM AS A DEPENDENT?

You can claim a child, relative, friend, or fiancé (etc.) as a dependent on your 2020 taxes as long as they meet the following requirements:

Qualifying child

• They're related to you.
• They aren't claimed as a dependent by someone else.
• They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
• They aren’t filing a joint return with their spouse.
• They're under the age of 19 (or 24 for full-time students).
• No age limit for permanently and totally disabled children.
• They lived with you for more than half the year (exceptions apply).
• They didn't provide more than half of their own support for the year.

Qualifying relative

• They don't have to be related to you (despite the name).
• They aren't claimed as a dependent by someone else.
• They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
• They aren’t filing a joint return with their spouse.
• They lived with you the entire year (exceptions apply).
• They made less than $4,300 in 2020.
• You provided more than half of their financial support.

When you add someone as a dependent, we'll ask a series of questions to make sure you can claim them. There may be other tax benefits you can get when you claim a dependent.

Related Information:

• What does "financially support another person" mean?
• What is a "qualifying person" for Head of Household?
• Does a dependent for 2020 have to live with me?
• Do I qualify for Head of Household in 2020?
• Can I claim myself or my spouse as a dependent?

If your son is your dependent it does not matter how much he earns IF he is a full-time student under the age of 24.  The education credits go on your tax return.  Dependents cannot get education credits.

https://ttlc.intuit.com/questions/1901172-what-are-education-tax-credits

https://www.irs.gov/help/ita/am-i-eligible-to-claim-an-education-credit

[zymxhjjtm197227]

my kid 19 years old, full time college student. He has some scholarships for his school, but not enough to cover qualified expense. He will file TAX on his own. I am wondering can he claim education credit if he doesn't have earned income.  thanks

[xmasbaby0]

No.   At the age of 19 if he is a full-time student you can claim him as your dependent.   The rule is if he CAN be claimed then if he files his own tax return he MUST say that he can be claimed as a dependent on someone else's tax return.   Dependents are not eligible for education credits.   Please re-read the information already given to you earlier--since you did not seem to understand it.

For your son:

https://ttlc.intuit.com/community/dependents/help/when-do-i-have-to-answer-yes-to-being-claimed-as-a...