I prepare my son's preschool teacher's taxes as one of my clients. She asked me to prepare their sons return this year. The son turned 18 in 2008 and attended highschool up until the summer. He worked for 2 different landscaping companies over the summer. One issued a W-2 for $2,600 with about $160 total withheld in Fed & State taxes. The other issued him a 1099-MISC with $2,400 in the Nonemployee compensation box.
He moved out of state (neighboring state of WI) in the fall into an apartment and is now attending college full time. He is still being claimed as a dependent on parent's return. Mom and dad pay for tuition, books, rent, groceries, you name it.
Obviously he is not an independent contractor, and so what do I do with the return? If I file a Sch C-EZ, he ends up owing self employment tax. The owners of the landscaping business who issued the 1099 are good friends of the parents and the son plans to come home and work for them again this summer. I spoke to the mom and she doesn't want to cause any "issues" between them and their friends, but also said that her son doesn't have the money to pay; so they'll have to pay the tax for him. They don't have the money either and are going to struggle to come up with the money to pay what they owe from their own return this year.
Any thoughts? Thanks so much in advance!
Becky