Hello, I am a teenager and have my parents permission to write on here, I was just wondering if I or my parents need to tax money from selling designs for shirts and stories, thanks.
If you are self employed then the income you make will go on YOUR tax return not your parents ...
If you are new to being self employed, are not incorporated or in a partnership and are acting as your own bookkeeper and tax preparer you need to get educated ....
If you have net self employment income of $400 or more you have to file a schedule C in your personal 1040 return for self employment business income. You may get a 1099-NEC for some of your income but you need to report all your income. So you need to keep your own good records. Here is some reading material……
IRS information on Self Employment….
Publication 334, Tax Guide for Small Business
Publication 535 Business Expenses
Home Office Expenses … Business Use of the Home
Publication 463 Travel, Gift, and Car Expenses
Publication 946 … Depreciation
There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Self Employed return and will help you keep up in your bookkeeping all year along with calculating the estimated payments needed ....
Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C. You pay 15.3% for 2017 SE tax on 92.35% of your Net Profit 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. You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040. The SE tax is already included in your tax due or reduced your refund. It is on the 1040 line 57. The SE tax is in addition to your regular income tax on the net profit.
If you are getting paid to do work (including designing or writing) then you are self-employed. That's a great thing, but it does mean you need to pay income tax and self-employment tax. A child's income earned from working is never reported on a parents' tax return, only on a tax return in your own name. However, unless you are paying more than half your support costs (your share of food, rent or mortgage, clothing, and all your other expenses), you can still be your parent's dependent.
You will need to start keeping records of your income and any "ordinary and necessary" expenses that are part of the work you are performing. There are more details to having self-employment income that you can take time to learn, the main thing getting started is to keep your own accurate records of your income and expenses. You are required to report your income even if you don't get tax statements (like 1099s) from your customers and clients; at the same time, if you do get tax statements like a 1099-K from PayPal, Patreon, or someplace similar, the income on the 1099 is not necessarily the amount of your taxable income, and having records will help you complete your tax return so you pay the correct amount and not too much or too little.
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