Prepare for 2023 tax return filling for my child

[LocHa]

I have a daughter who will turn to 18 years old this October. She is an university student now.

This summer, she was working as a part-time employee and got paid. The store also did tax withholding from her paycheck.

The total income she had this summer was about $3000 before tax. I believe she will get a form 1099-MISC or 1099-XXX.

UPDATE:  I am sorry. I believe she will get W-2 form ( Not 1099-XXX)

My question is:  For 2023 tax return:  Does she need to file tax return separately? OR should she do it separately?

I and my wife always have married filing jointly, Can we includes $3000 as our imcome and she won't have to file tax separately?

Thank you!

[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 or 1099NEC then he must file a return and pay self-employment tax for Social Security and Medicare.

You might also want to use free software from the IRS Free File versions:

https://apps.irs.gov/app/freeFile/

[VolvoGirl]

Sorry she has to file her own return for her income.  If they took out withholding she will probably get a W2 not a 1099NEC.   She wouldn't have to file if she gets a W2 since it's under the standard deduction amount except she has to file to get back the withholding.

If she gets a 1099 she has to file for $400 or more as self employment income.   

If she files a return be sure she checks the box that says she can be claimed as a dependent on someone else's return.  You can still claim her since she is  under 19 or under 24 and a full time student.  

[NCperson]

@LocHa 

NO! your daughter's income belongs on her tax return! it will list HER social security number.  However, you still claim her as she is a student.

On her tax return, she has to check the box indicating she CAN BE claimed by someone else.  Since she is receiving a 1099-NEC statement (i.e. she was not an employee), she is required to file because her income exceeds $400.

And I just reread your post....you are using terms interchangeably which can create confusion.  Was she an employee or a 1099 contractor.  If the employer withheld the social security and medicare tax, she was an employee.   In that case, if no federal or state tax was withheld, she has no requirement to file until her income exceeds $13,850. 

There is no "income tax" to be paid. 

But there is "Self Employment tax" of 15.3% to be paid.  That is the social security and medicarea tax that would had been withheld had she been a W-2 employee.   

The way it works for a W-2 employee is the federal government expects to receive 7.65% from the employee and a like amount from the employer.  The employer can deduct his portion as a business expense. 

For a 1099-NEC contractor, it works simpliar, but since there is no separate employer, your daughter pays the entire 7.65% times 2 but then can deduct half from her income when calculating her income tax, but there won't be any income tax in this case so subtracting half doesn't do anything. 

Separately, be sure to take advantage of the College tax credits (AOTC or LLC) based on form 1098-T that YOUR DAUGHTER receives.  But it is you that needs that form to create the credit.  It is confusing and I suspect many fail to take advantage of the credit.  

[LocHa]

Thank you! From your reply, I understand that she must file the tax return separately and on her tax return document, she must indicate that she can be claimed as a dependent on someone else’s tax return (her parent tax return) and we (parent) are still able to claim her as qualifying dependent (<24 years old plus full-time student). Thanks!

[xmasbaby0]

@LocHa Your post has some contradictory information.   You say that there was tax withheld from your daughter's paychecks---which would suggest she will be receiving a W-2 with tax, Social Security and Medicare withheld.  But then you say she will receive a 1099.   Which will it be?   If she has federal tax withheld, it will be in box 2 of her W-2; state tax withheld will be in box 17.  She can seek a refund of that tax if it was withheld, but will not be refunded for anything withheld for Social Security or Medicare.

If she has been working as an independent contractor, then she could get a 1099NEC and must file a return if she made over $400.  She will OWE self-employment tax and will have to pay all of her Social Security and Medicare.

You need to be clear on what sort of document she will be receiving for the income she has earned.   While she is a full-time student under the age of 24, she can be claimed as a dependent, but must say on her own return that she can be claimed.

[LocHa]

Thank you. You are correct. She will get W-2 I think so she does not have to file a tax return separately, so in this case, do we (parent) have to report her income ($3000) in our tax return?

[LocHa]

Thank you. I think she will get W-2, not 1099-XXX. Thank you again for your clarification. It helps me a lot.

[LocHa]

Thank you for your information. I got it now.

[VolvoGirl]

NO.  You do not report her income on your return.   She doesn't have to file unless they took out tax withholding in W2 box 2 (federal) or box 17 for state.  But not for SS and Medicare in boxes 4 & 6.  

[TomD8]

@LocHa ==

"She will get W-2 I think so she does not have to file a tax return separately, so in this case, do we (parent) have to report her income ($3000) in our tax return?"

NO!  A child's income from work is never reported on the parents' tax return.  Doesn't matter if she gets a W-2 or a 1099-NEC.

[LocHa]

Awesome. I will have to wait and see what are on her W-2 form. Thank you again!

[rjs]

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@LocHa wrote:

She will get W-2 I think so she does not have to file a tax return separately . . .

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If her income is only about $3,000 she will not be required to file a tax return. If she does not file, her income does not get reported anywhere. But if federal or state income tax was withheld from her pay, she will probably want to file a tax return, even though it's not required, in order to get a refund of the income tax that was withheld.

If she does file a tax return, make sure that she checks the box indicating that she can be claimed as a dependent by someone else. We harp on this because we see so many cases where a student files her own tax return and does not indicate that she can be claimed as a dependent. That causes problems for the parents when they try to file their tax return claiming the student, and it requires extra paperwork to correct the error on the student's tax return.

[NCperson]

@LocHa - if her W-2 income is under $13,850, there is no filing requirement! 

HOWEVER, is there were any federal tax withholdings, the only way to get them returned is to file a return....and if she doesn't file to get the money back, the IRS is pleased to keep it 😀

please read: 

https://turbotax.intuit.com/tax-tips/irs-tax-return/does-everyone-need-to-file-an-income-tax-return/...