Unemployed helps my son with housechores and he gives me money. Does that count as taxable income? Does that count towards min income for obamacare marketplace insurance?

[r-wa313413]

I am 67. just moved to USA (Virginia) in 2023. unemployed.
If I report the pocket money my son gives me in Turbo Tax, it gets taxed as self employment. If I don't report it, I am worried that marketplace will make me pay back the credit because my income was lower than my estimate when signed up

[Vanessa A]

If you just arried to the US in 2023, did you meet the Substantial Presence Test or the Green card Test?  If not, then you will not be able to file using TurboTax as you would need to file a 1040NR as a non resident alien.  You can do this using Sprintax.com.

Is your son claiming you as a dependent on his return?  When you say pocket money, how much is he paying you?  Is this like an allowance that he gives you?  If he is claiming you as a dependent and basically just giving you spending money like an allowance, then this would not be taxable income. 

If he is treating you as a household employee and paid you more than $2,700, then he should issue you a W-2, so you can report your income from him. As his parent, he does not have to withhold FICA taxes on your wages as his household employee.

If he did not control the work you did, but there is a formal agreement that you provide certain services and are paid in a certain manner, then you would be considered Self-Employed and would need to pay the SE taxes.  

If you earned less than 100% of the Federal Poverty Lever, even if you reported more to the Marketplace, you would not have to repay the premium tax credit. 

[r-wa313413]

Thank you for the answer!

I am a green card holder. So, the green card test applies to me. I can use Turbotax.

My son did not claim me as a dependent on his return. He paid me $7300 total throughout the year as an allowance.

There was not a "formal employment agreement". Rather, as I lived with him, he wanted to provide me with "income" so I am qualified for health insurance on the marketplace (obamacare).  Would that be taxable income I need to report?

[Vanessa A · Accepted solution]

If your son paid you $7,300 to do household chores, then it is taxable income, although it would not be Self-Employment income, it would be income as a household employee. 

You can enter this as other income so it is not treated as SE income.  To do this, simply select the following:

1. Income
2. Less common Income
3. Miscellaneous Income
4. Start next to Income not already reported on a form W-2 or 1099
5. Yes to Other Wages Received
6. Enter Your wages earned as a household employee

This amount of income, does not qualify you for the Premium Tax Credit as it is still well below the Federal Poverty Line.  In essence, it would be the same as filing with no income.  But, you would not have to repay the credit because you are below the poverty line.