1099-NEC for dependent children

Forum|Forum|5 years ago
March 9, 2021
3 replies
0 views

My 22 year-old child is a full-time student and my tax dependent. She worked for a small company (no HR department or formal accounting) during the summer that has given her a 1099-NEC for wages of ~$6,000. Turbo Tax seems to considering the income as "unearned income" and forcing the use of form 8615, including applying my tax rate to her income. How should this "self-employment" income reported on the 1099-NEC be reported to avoid getting hit with my tax rate as if it were unearned income?

Best answer by LenaH

In order to eliminate the 8615 and report her 1099-NEC as self-employment income, you must answer the questions following the entry of her 1099-NEC so it flows to a Schedule C (self-employment income).

Please follow the steps below:

Open your return.
Search for 1099-NEC with the magnifying glass tool at the top of the page.
Click on the Jump to 1099-NEC link at the top of the search results.
Click Edit next to the 1099-NEC.
Continue past the information entered.
On the page titled Guess what? You can deduct expenses for the example work choose Yes, I have expenses to deduct.
On the page titled Self-employed 1099-NEC Income, you can add a new Schedule C business on this screen.

To confirm your 1099-NEC was linked to your Schedule C, please follow the instructions below:

Open your return.
Search for Sch C with the magnifying glass tool at the top of the page.
Click on the Jump to Sch C link at the top of the search results.
On the page titled Your 2020 self-employed work summary, you should see the 1099-NEC listed with the corresponding amount.
Click review next to the income from your 1099-NEC.
Follow the on-screen instructions on the following pages.

LenaH

Answer

Community Manager

Please follow the steps below:

Open your return.
Search for 1099-NEC with the magnifying glass tool at the top of the page.
Click on the Jump to 1099-NEC link at the top of the search results.
Click Edit next to the 1099-NEC.
Continue past the information entered.
On the page titled Guess what? You can deduct expenses for the example work choose Yes, I have expenses to deduct.
On the page titled Self-employed 1099-NEC Income, you can add a new Schedule C business on this screen.

To confirm your 1099-NEC was linked to your Schedule C, please follow the instructions below:

Open your return.
Search for Sch C with the magnifying glass tool at the top of the page.
Click on the Jump to Sch C link at the top of the search results.
On the page titled Your 2020 self-employed work summary, you should see the 1099-NEC listed with the corresponding amount.
Click review next to the income from your 1099-NEC.
Follow the on-screen instructions on the following pages.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

EllieWS

Level 3

It looks like I can only add 1099-NEC under either my husband's or my name on Turbo Tax. The 1099-NEC was belong to my high school son who made money out of reffing sports games last year. How should I add under his name? Based on what you said, we have to create a business, so it's him?

DawnC

Level 15

You do not add your son's earned income on your tax return. He has to file his own tax return and since the income is from a 1099-NEC, he will include a business Schedule C on his return. You can still claim him as a dependent on your tax return. But when he completes his tax return (or you do it for him) make sure that the ''someone else can and will claim me'' boxes are checked. This will ensure no one's return gets rejected. @EllieWS

The income he earned while refereeing games is considered self-employment. He is, for tax purposes, the owner of his own business. He can deduct expenses related to that income on Schedule C. When setting up the 'business' in TurboTax, he can use his own name and address for the business which keeps it simple.

Even if you're a dependent, you'll generally need to file your own 2020 tax return if:

Your earned income (money you made by working) exceeds $12,400
Your unearned income (interest, dividends, capital gains, etc.) exceeds $1,100
Your business or self-employment net income (gross minus expenses) is at least $400
Your gross income (earned plus unearned) exceeds the larger of $1,100 or your earned income (up to $12,050) plus $350

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

EllieWS

Level 3

Vanessa A

Level 15

No, she cannot deduct the mileage on her return for you transporting her to photoshoots and such. She would have to own the vehicle to deduct mileage.

You cannot deduct the mileage on your return either as you are not earning the income.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

jhollifi

Level 2

Thank you. What about hotel stays?

GeorgeM777

Level 11

To follow-up on the comments from @Vanessa A, the hotel stays would not be deductible by you either because it does not appear to be your business expense, but rather a business expense belonging to your minor child. If you minor child filed their own respective return, then your minor child could include their business expenses on their respective return. Those expenses could include the mileage and hotel stays provided the minor child paid for those expenses in connection with the modeling work.

@jhollifi

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"