I spoke with two IRS agents from the MISC division and both told me that he does not owe SE taxes since he is under age 18 and the newspapers are delivered to a point that is for subsequent delivery.
Please feel free to post any additional details or questions in the comment section. As stated in a comment below, most all IRS references to the newspaper carrier under 18 years have been deleted. I'm keeping the Hal_Al comment to maintain the thread.
Most newspaper carriers are classified as direct sellers. Please see this IRS reference: http://bit.ly/2BRUhqP
If your son a direct seller according to that reference, he will need to report the income on a Schedule C subject to Self-Employment tax.
From SuperUser Hal_Al:
Paperboys, under 18, are exempt from self-employment tax
Use this workaround to get the income into the earned income area without subjecting it to the SE tax.
In TurboTax, enter at:
Wages & Income
-Less common Income
-Misc. Income 1099-A…..
-On the next screen select Income not already reported on W-2
-Check yes to did your receive other wages
-Skip the next two screens (Household wages & Disability pay)
-Check yes to Any Other Income
-On the next screen select Other
-On the next screen type in Minor News Carrier and the 1099-Misc amount
The result is that the income ends up in Line 7 as wages, and thus earned income, but there is no SE tax applied since it doesn't affect SE income.
I suggest you don’t e-file, but mail your return. Include a statement with your return something to the effect that "The tax software used to prepare this return does not allow for a minor news carrier to enter his income as self-employment income without also applying the SE tax. Since he is not subject to the SE tax, he has entered this income into Line 7 of this return.”
Please feel free to post any additional details or questions in the comment section. As stated in a comment below, most all IRS references to the newspaper carrier under 18 years have been deleted. I'm keeping the Hal_Al comment to maintain the thread.
Most newspaper carriers are classified as direct sellers. Please see this IRS reference: http://bit.ly/2BRUhqP
If your son a direct seller according to that reference, he will need to report the income on a Schedule C subject to Self-Employment tax.
From SuperUser Hal_Al:
Paperboys, under 18, are exempt from self-employment tax
Use this workaround to get the income into the earned income area without subjecting it to the SE tax.
In TurboTax, enter at:
Wages & Income
-Less common Income
-Misc. Income 1099-A…..
-On the next screen select Income not already reported on W-2
-Check yes to did your receive other wages
-Skip the next two screens (Household wages & Disability pay)
-Check yes to Any Other Income
-On the next screen select Other
-On the next screen type in Minor News Carrier and the 1099-Misc amount
The result is that the income ends up in Line 7 as wages, and thus earned income, but there is no SE tax applied since it doesn't affect SE income.
I suggest you don’t e-file, but mail your return. Include a statement with your return something to the effect that "The tax software used to prepare this return does not allow for a minor news carrier to enter his income as self-employment income without also applying the SE tax. Since he is not subject to the SE tax, he has entered this income into Line 7 of this return.”
That link is no longer good. This looks likes like the updated address.
@TurboTaxMichaelDC you might want to add a comment to that effect at the original question.
(Note there is a specific test described in the FAQ, review it carefully). Also note that you cannot rely on what the IRS tells you. Administrative estoppel means that agency employees cannot change the law, so if they get it wrong, that is on you. You might be able to get diligence penalties waived based on their advice.
<a rel="nofollow" target="_blank" href="https://www.irs.gov/faqs/interest-dividends-other-types-of-income/1099-misc-independent-contractors-and-self-employed/1099-misc-independent-contractors-and-self-employed-2">https://www.irs.gov/faqs/interest-dividends-other-types-of-income/1099-misc-independent-contractors-and-self-employed/1099-misc-independent-contractors-and-self-employed-2</a>
I meant to say that my son DOES NOT deliver to a point for subsequent delivery. I spoke with two different IRS agents and both said that since he is under 18 and delivers directly to the customers he does not owe SE tax. I understand your point on IRS agents don't always get it right. Thanks very much to both of you!