My 16 year old minor received a 1099 misc. for delivering newspapers. He earned $1610. I can claim him as a dependent. does he need to file a tax return?

[Hal_Al · Accepted solution]

Yes, you can still claim him as a dependent. If the amount was in box 7 of the 1099-Misc, he will need to file a tax return. If box 3, he does not*.

If box 7, comment back for more detailed instructions on how he should file to avoid self employment (social security & medicare) tax. Paperboys, under 18, are exempt from self employment tax. See below for details.

*You do not report his/her income on your return. If it has to be reported at all, it goes  on his own return. If your dependent child is under age 19 (or under 24 if a full time student), he or she must file a tax return for 2014 if he had any of the following:

1.         Total income (wages, salaries, taxable scholarship etc.) of more than $6,200 (2014).

2.         Unearned income (interest, dividends, capital gains) of more than $1000 (2014).

3.         Unearned income over $350 and gross income of more than $1000

4.         Household employee income (e.g. baby sitting, lawn mowing) over $1900 ($6200 if under age 18)

5.         Other self employment income  over $400.  The IRS considers anything in box 7 to be self employment income. See additional comment below about special treatment for newspaper carriers.

Even if he had less, he is allowed to file if he needs to get back income tax withholding. He cannot get back social security or Medicare tax withholding.

 He doesn’t get his own $3950 exemption (deduction), when he files. In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section.

[wm_usa]

Thank you.  Yes it is in box 7 of his 1099-misc form. The amount he made was $1610.   I don't see how he gets much of a break.  Should he really have to pay so much federal tax?  Thanks again for your help!

[Hal_Al]

Paperboys, under 18, are exempt from self employment tax (see <a href="http://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions..." rel="nofollow" target="_blank">http://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions...>)
 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.”

[wm_usa]

Thank you soooo much for your help!  You have made me a continued believer in Turbo Tax!  Not because of the good news so much as the wonderful way you have made this process much clearer!

[marlocooks4u]

My daughter is 15 and earned $911.43 as an Independent contractor with a direct sales jewelry company. How does she file?

[Hal_Al]

There is a specific exception in the law for news carriers. You daughter, on the other hand, has self employment income if she received a form 1099-Misc, with the amount in box 7. Age is not an exception.
The IRS considers anything in box 7 of 1099-MISC to be self employment income. Enter the 1099-Misc income, at Other Common income / income from a 1099-MISC . TurboTax (TT) will complete Schedule C or C-EZ for you and allow you to deduct any expenses associated with this income. You'll also have to pay self employment tax (social security & Medicare) on any profits greater than $400. These types of payments are frequently done this way. Your "employer" is not the only one.
You may have to upgrade to the Home & Business version of TT. There's a chance you may be able to use TT Deluxe or Premier. Enter your income at the 1099-Misc screen (even if you didn't get a 1099-misc). For details, see <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/1901317-schedule-c-ez-net-profit-from-a-business">https://ttlc.int...>

[jonesidaho]

@Hal_Al  . . .My dependent son is 18 and did summer research for a local university.  His $1980 income is in box 3 of the 1099-Misc. He also earned $1618 on a W-2 of which $47 of federal income tax was withheld.  Does he just not file and lose that as the lesser of two evils?

[Hal_Al]

jonesidaho - Box 3, of a 1099-Misc,  means it's not self employment. "Research for a local university" indicates the income could be considered scholarship, so he does not have enough total income to be required to file a tax return. If it's considered anything else he IS required to file a return.

 If you use download TT, instead of online, you can do an unlimited number of returns. I would do his return by hand rather than forego the $47. The total $3598 goes on  on line 7 of form 1040A with SCH 1980 on the line to the left of line 7.
But I think he may be able use the free online edition of TT. Don't enter the 1099-Misc at the 1099-Misc screen, instead, In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)
 - Wages & Income
- “I’ll choose what I work on” Button
Scroll down to:
-Less Common Income
      -Click "Visit All". You'll eventually reach a screen to enter the scholarship amount.

[jonesidaho]

@Hal_Al Thank you for your prompt reply! I was hoping he could get away with just not filing.  He is still in high school so it was not a scholarship.  According to TT online, he owes $233 for federal which takes into account the $47 credit. I am assuming that is for the SE tax?  He did have to upgrade to deluxe so it probably would be beneficial to download or do his by hand.  Any other ways around owing so much?

[Hal_Al]

The are  three choices for reporting the income. It is usually self employment, because he performed work for the income. It could be  scholarship or "other income".
The fact that it was reported in box 3 and that there is a "one time gig" exception  to self employment tax, means he can report it as other income on line 21 of form 1040. He will have to pay some tax, as it will be treated as unearned income (and he gets a reduced standard deduction), but not self employment tax. He is subject to the "kiddie tax" and  will have to do form 8615..
I would download. You can pay only one software fee to do your tax and his (and anybody else's).
Yes, owing $233 appears to be because of self employment tax

[jonesidaho]

@Hal_Al   THANK YOU!!!

[thegenesiscorp]

I received $7,281 from my University as I work as the manager of the mens tennis team.  On my 1099 I have $5000 in non employee compensation for the year.  I am a full time student and wandering how to not have to pay the "self-employment tax" since I am considered an independent contractor and still claimed on my parents return as a dependent.

[Hal_Al]

The fact that you have an amount in box 7 of a 1099-misc (non employee compensation) means you MUST pay self-employment tax (SET). SET is the mechanism by which independent contractors pay their social security and medicare tax (FICA).
Being a dependent on someone else's return and/or a full time student does not exempt you from SET or FICA.

[bethannmeyer]

My 16 year old daughter has two W-2s and a 1099-Misc.  Her total income is under $5000.  But when I try to file her taxes online it says she owes $104 because of the 1099.  (She only paid $20 federal income tax on one of her W-2s.  The second one did not have any withheld).  Her income on the 1099 is in box 3.  She sold a sheep at a county show for FFA.  Does she still have to file?  And will she still owe that $104?