Does DD14 need to file a 2010 tax return?

[runwad]

She's made about $700 umping softball games and I'm pretty sure she'll get a 1099 from it. I wasnt sure the amount a juvenile is allowed to make. Anyone know? Thanks

 

[disneychrista]

She probably doesn't "have to" but she probably should. If you never file a return then the 7 year look back never starts. So technically in 20 years they could ask her why she didn't file for 2010.

Are you sure she will get a 1099 and not a W-2? Did they withhold any taxes from the wages?

 

[Skatermom23]

If no taxes were withheld then she doesn't have to file. If taxes were withheld then she should in order to get those back.

 

[mrsklamc]

Yeah, you don't have to file for $700 unless you paid in and need to get it back.

 

[Cheshire Figment]

The problem is that although her Income Tax will be zero, if she is getting a 1099-MISC showing "Non-employee compensation" this makes her a contractor and supposed to file a return with a Schedule C (or C-EZ). If her net income is more than $400 she will be laible for self-employment tax, which is basically both the employee and employer share of Social Security, which is 15.3% of net income. This is filed through the Form 1040-SE.

Mike (CPA Retired)

 

[allyphoe]

I personally would not necessarily take the position that a 14yo who made $700 was in the trade or business of umping softball games.

She should file a return, because otherwise the IRS is going to assume that the $700 was self-employment income, and send her a notice, but it's not a no-brainer that this is Sch C / SE, rather than Line 21 income.

The SE tax would only be $107, though.

 

[SandrA9810]

Yes.
I've been working since I was 13, and have always filed a tax return. Of course, I was getting a W-2 with taxes withheld on it.

 

[Swimalie]

The problem is that although her Income Tax will be zero, if she is getting a 1099-MISC showing "Non-employee compensation" this makes her a contractor and supposed to file a return with a Schedule C (or C-EZ). If her net income is more than $400 she will be laible for self-employment tax, which is basically both the employee and employer share of Social Security, which is 15.3% of net income. This is filed through the Form 1040-SE.

Mike (CPA Retired)

This... My sister and I were lifeguards and filed returns as contractors. Years later the IRS sent my sister a letter that she didn't pay enough in social security and she owed it. They didn't send me the same notice, however. So they can find out and she will owe it after the fact.

 

[tinatark]

You can report her income on your tax return. No additional taxes for you because of it. We do this for our kids every year.

 

[MTW]

Yes she does AND she will owe taxes.
Danger of getting incorrect advice on a message board. You should be asking a tax professional.
If you do not properly file the taxes she should have paid will accrue penalties and interest potentially costing you far more than it would have to have paid someone who knows what they are doing to handle this issue.

 

[silmarg]

Cheshire Figment is correct. Assuming taxes were not withheld, then child is subject to self employment taxes (Social Security and Medicare taxes) - so he would be required to file and pay the self employment tax.

If there taxes withheld from the pay then there would likely not be a requirement to file (as the income would be too low to require a filing). If taxes were withheld (above and beyond Social Security and Medicare) then the child will likely get a refund of those taxes assuming the child does not have much in the way of other income - so while its not required to file under this fact pattern, the child should file.

Also of note in this case, the child's income can not be added to the parents return. That accommodation is permitted when the only income a child has is on investment income (like interest and dividends). Employment income is not afforded this accommodation.

If you (or her) can afford it, fund an IRA in DDs name. Its great to start an IRA at such a young age.

I hope this helps (I am a tax practitioner by trade).

 

[runwad]

Cheshire Figment is correct. Assuming taxes were not withheld, then child is subject to self employment taxes (Social Security and Medicare taxes) - so he would be required to file and pay the self employment tax.

If there taxes withheld from the pay then there would likely not be a requirement to file (as the income would be too low to require a filing). If taxes were withheld (above and beyond Social Security and Medicare) then the child will likely get a refund of those taxes assuming the child does not have much in the way of other income - so while its not required to file under this fact pattern, the child should file.

Also of note in this case, the child's income can not be added to the parents return. That accommodation is permitted when the only income a child has is on investment income (like interest and dividends). Employment income is not afforded this accommodation.

If you (or her) can afford it, fund an IRA in DDs name. Its great to start an IRA at such a young age.

I hope this helps (I am a tax practitioner by trade).

We do fund an ira for her, a roth. This is the first year she has umped so i'm not sure if she will get a w-2 or a 1099 I thought they said 1099(?) guess I will ask the commish. She just gets a check no taxes withheld from it. But I know we had to provide her soc so I'm pretty sure it gets reported to the IRS. I just thought if they made under so much they didn't have to file but I wasn't sure on the amount.


eta She's also had a little community paper route for the past 4 years, no info is reported to the irs on that we use that $ to fund an ira for her

 

[seashoreCM]

She may be able to deduct mileage, cost of uniforms, etc. directly on the schedule C which would reduce the amount of self employment tax.

 

[hambirg]

Not sure how this applies to the tax code, but how can a 14yr old be considered an independent contractor when minors can't enter into contracts?

 

[silmarg]

The general rule for filing a federal return for someone who is claimed as a dependent is:

if the dependent has more than $950 of unearned income (like interest or dividends) they must file - they may however be able to file on their parents return using form 8814 instead of filing a 1040.

if the dependent has more than $5700 of earned income they must file a 1040 series return (they can not file with their parents)

if the dependent has $400 or more of net earnings self employment then they must file (and attach schedule SE). They can not file with their parents.

 

[hambirg]

Whoever is paying her may be in trouble for not paying employer taxes. In fact, I'm pretty sure she is wrongly classified. . .from the IRS:

eh. . it doesn't want to copy and paste. . .but read this starting on page 6:

http://www.irs.gov/pub/irs-pdf/p15a.pdf

There are lots of examples of why she isn't an independent contractor. . like I'm pretty sure they tell her where and when to work. . .she's not subject to profit and loss. . .etc. . etc. .

ETA- I wanted to come back and share what I learned since I posted the above. Apparently this issue has come up in CA, specifically as it relates to refereeing, and the IRS has investigated many employers. It is ok for them to classify her as an IC, and she may or may not really be one. BUT they may be within the definition, if they are being careful. . .so she needs to file a return and pay self employment taxes. She can and should claim any work related expenses. HTH