My son made $5450 on a 1099misc and has no other income but I claim him as a dependent does he still owe tax

[dawg19]

my son made $5450 on a 1099misc and has no other income but I claim him as a dependent does he still owe tax

[CathiM · Accepted solution]

You can still claim him as a dependent if you otherwise qualify.  He needs to file his own return, he can choose to not claim himself (mark the box that says I am being claimed by someone else). This means he will not get the personal exemption of $4,050 but will still get the standard deduction of $6,350. 

He is required to file, since 1099-MISC is considered self-employed income. Since the $5,450 is less than the $6,350 standard deduction, he will not pay federal taxes but he will have to pay about 15% on his net income for Self-Employment taxes (Social Security and Medicare). 

Net income is calculated as the 1099-MISC amount minus any "business" deductions he qualifies for.  To get deductions, he has to file a Schedule C as though he is a "business". It sounds complicated but TurboTax will guide you through the questions if you choose to file a Schedule C (see below).  

To reduce his taxes ,he can deduct expenses from his 1099-MISC income. However to do this, he must use TurboTax Online Self-employed version or TurboTax CD/Download Deluxe version (CD/Download is the more cost effective choice).

To get deductions for self-employment income:

Type “Schedule C” in the Search box.

1. Select the “Jump to” link.

• If this is your first time working in this section: You’ll be asked some questions about your self-employment work, and then have a chance to enter your expenses.
• If  you have already entered some information about your self-employment work:
• Select Edit next to your business, and confirm your general business info if asked.
• Select Add expenses for this work OR, if this your first time entering expenses, select Continue on the Let's get the deductions...screen.
• Follow the screens to enter your expenses.

[xmasbaby0]

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 then he must file a return and pay self-employment tax for Social Security and Medicare.  You may want to use this version of TT for that:

https://turbotax.intuit.com/taxfreedom/