Tax return filing for dependent daughter who is a disabled adult

[Adirondacklady1967]

My twin daughters are disabled adults at 28. They do piece work at a non profit company who employs disabled persons. They receive 1099-MISC and their earnings are reported in box 3 Other Income. Last year the tax preparer said she had to file on a $3156 amount. My other daughter only made $951.50 and did not have to file. I questioned it because I thought there was a limit of $12000 before they had to file. The company that employs them said they are supposed to file as single and would fall under that limit so they shouldn’t have to had filed. What are the rules? I’m confused. I want to file online. This year they made $8283/$1624. Is it considered self employment tax since it’s in box 3? I do claim them both on my return. 

[Vanessa A]

Technically, they both should both have filed a return since they had more than $400 in self-employment income. There is NOT a $14,600 or $12,000 limit for someone who is getting self-employment income.  That limit is $400. 

That is IF the company that employs them is properly classifying them as independent contractors.  If the company has behavioral or financial control over how they work, then they are not independent contractors and this income should be reported on a W2. 

Facts that provide evidence of the degree of control and independence fall into three categories:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of relationship: Are there written contracts or employee type benefits (that is, pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
   
    

If they are misclassified as Independent contractors instead of employees, then form SS-8 could be filed for the IRS to make the determination.   If they ARE employees, they do NOT need to file a return as their income is well under the standard deduction.