13 year old kid and 1099

[JenMO]

Child worked for dad's ptnshp and 1099 was issued. He's a student and not really a job, just a helper. Can it be put under other income so no SE?

[Koss]

Self-Employment Tax

There's a bit of case law that supports the position that when one does an "odd job" here and there, that this is not subject to self-employment tax because the person is not operating a trade or business.

I believe the case that went to court involved a guy that installed a garage door for an elderly neighbor, and then maybe did something else, such as painting a bedroom for her, got paid more than $400 for the two jobs, and reported it on line 21.

The guy was actually a pharmacist or something. He was not a professional handyman, and he was not operating a trade or business. He did not perform those types of services on a regular basis.

The tax court held that the income was properly reported on line 21, and was not subject to SE tax.

But I don't know if that will fly on your fact pattern. It's very subjective.

BMK

[JG EA]

And if this is determined a real job: Are the parents the only partners in the partnership? If so, they can file a W-2 - no FICA, no FUTA, and probably no SUTA.

[Jesse]

But check out your state laws, although they may be able to avoid FICA, FUTA and SUTA they might be subject to Workmens Comp or other state requirements.

[S T]

Partnership

As JG mentioned, There is something about the child (family employee) being employed by parent (or partnership in which partner is a parent of the child) See Circular E.

If only one of the parent's is a partner in the partnership I don't believe the child is exempt! If it is a h/w partnership in which both parents are the partners in the partnership, the child would be exempt if in the course of business until age 18, domestic until age 21

As Jesse, mentioned check out your State Laws.

I had one a few years ago that the State Laws were different than the Federal laws and we had to issue correction notices!

In your case, who are the partners in the partnership? MOM and DAD, or DAD and another PARTNER?

Sandy

[JenMO]

Dad is a partner with his brother. No exemption for FICA I don't believe. I read something about young babysitters just taking summer jobs and that not being a job to have to pay SE on. Can't find the source back, but wouldn't this fall in the same type of category. I was thinking about reporting on LIne 21, other income.

[Jesse]

Check out TTB pg 5-18 - Kids in Business.........

Once again Facts and circumstances.

[Lion]

How Much?

How many hours did he work? All at once or spread out over time? How much was he paid per hour or per project? He worked for a business. Unless all he did was shovel the snow off the walk one day after school, how could you say he wasn't in it for the profit? Obviously, the company thought the kid was an independent contractor and didn't label him as chore labor or some such. How are you going to convince the IRS that he wasn't self-employed?

[DaveO]

Looks to me like the kid should have been treated as an employee and paid on a W-2. The partnership was trying to avoid payroll tax and workman's comp. They chose not to follow the rules on their part. It's unfair they would prevail upon you to bend the rules. I tell my clients that they are not my rules to bend.

I will take a more agressive posture when an activity is clearly not for profit. I just met with a couple this morning. They are volunteer care givers for an elderly couple and drive them to their Dr appontments and such. HHS offered to reimburse them some mileage which they accepted. Then they sent them a 1099. I guess no good deed goes unpunished. In this case the business mileage rate is well in excess of the reimbursed rate so my choice is do I report a "C" loss on an activity clearly not for profit or do I limit mileage to only zero out the 1099?