Child Income

[rsandy]

Client's 12 yr old child earned $ 1,600.00 in 2009 reported as misc income 1099, under his social, in box 7. His Father, Head of Household, had mileage and accomodations expense, but I don't believe that that income needs to be reported either by the child or the father, ie Kiddie Tax. What say you?

[Dusty2004]

Client's 12 yr old child earned $ 1,600.00 in 2009 reported as misc income 1099, under his social, in box 7. His Father, Head of Household, had mileage and accomodations expense, but I don't believe that that income needs to be reported either by the child or the father, ie Kiddie Tax. What say you?

So, the son has "Self Employment income" of $1,600. Social security and medicare taxes have to be paid on any amounts over $400.

Seems to me they have to file a return for the son. It is not investment income it is self employed income. Now, that said, how did the son earn the income? Newspaper delivery? Other?

Any expenses the father had does not get entered into the return for the child.

Dusty

[Jesse]

What was the income from?

http://www.thetaxbook.com/forums/showthread.php?t=13546

Check out the above thread to see if similar?

[CarolToppCPA]

SE income

So, the son has "Self Employment income" of $1,600. Social security and medicare taxes have to be paid on any amounts over $400.

Seems to me they have to file a return for the son. It is not investment income it is self employed income. Now, that said, how did the son earn the income? Newspaper delivery? Other?

Any expenses the father had does not get entered into the return for the child.

Dusty

I agree with Dusty; it is SE income to the child. Child must file a Sch C.

But it might be reasonable for the child to deduct mileage and accommodation expenses if they were reasonable and necessary to earning the income. Sure, they might have been paid by dad, but are still legitimate business expenses incurred in earning the $1600.

[gkaiseril]

Also look at making a contribution to a deductible IRA or ESA in the child's name base on his net income. It will reduce the federal income tax and may impact the state income tax.

How the money was earned may affect the treatment.