Student Dependent and 1099 Misc Form

[David1980]

I suspect I could report 1099-MISC on line 21 w/no SE for people who are in the trade or business of something and have been for years and have most of them get off with no SE by claiming it's a one time thing. Wouldn't make it right. In my mind, the one time exception would be something short like helping someone move one weekend for a bit of money. Not something that spans the summer.

Obviously we all have some period of time when we say something should be exempt from SE because it was a one time thing. If I said this one time I did some tutoring for a couple weeks I suspect a lot of folks would prepare me a return exempt from SE. If I said this one time I did some tutoring for 20 years I doubt folks would give me the same treatment. At what period of time does something change from a one time thing? Or is it based on the number of things. Tutor one student it qualifies as exempt from SE. As soon as I add a second student it's no longer one time? Tutor one subject, it's a one time thing. Tutor more than one subject it's subject to SE?

[buzzardbreath]

Reality Check

I am amazed at the many attempts to justify treatment on Line 21 to avoid SE tax. When the IRS left this possibility open, it gave all manner of real employee-employer situations a way to weasel out. 5% may be eligible for line 21, but the existence of this possibility means that the other 95% will use it to bail out of employment taxes.

Even a temporary job is still a "job." And the lion's share of such 1099s occur when some employer doesn't want to pay payroll taxes for someone who is working in an employee relationship. What I'm hearing is that if a college student wants to be a doctor and he takes a summer job painting houses, then he should not be a painter because he wants to someday be a doctor.

Almost every "moonlighting" job is outside a taxpayer's "normal" circumstances. Whereas there are a few situations that would qualify for line 21 treatment, 95 out of every 100 situations we encounter as preparers are people simply working for money, whether as a should-be employee or a legitimate subcontractor.

[JohnH]

Not so fast there. I wouldn't be so quick to condemn the attempts to regard this as not being self-employment income.

After all, the Batok case is still out there, I believe. In years past I've used it on a couple of occasions to waive off on S/E tax when there was enough money at stake. But if we are only talking about a couple of thousand in earnings and less than $300 in SE tax, the savings isn't worth the effort.

[S T]

Again thanks for all of the viewpoints and information.

I already have tried the form 8919 and SS8 form on another client that was filed in March - and we are still waiting--------- in October. One correspondence from a clerical person stating it wasn't completed correctly, and and was sent back with the documenation *see so and so and so* This particular t/p did involve about $ 2,000 in added taxes, and the t/p already had received a "positive" settlement at the State Level. So we were using that as "backup" for the "position and substantiation for the form 8919.

This IRS dept is not equipped to handle these requests as far as I can tell.

On this t/p (orig post) not worth it - in the meantime, there were some "small business expenses" that were discussed, so reduced on the schedule C.

We are done! - It was the right thing to do in my mind, and client/parents agreed!

So 2012 is completed, and we will re-visit for 2013 if need be!

Sandy

[Burke]

This is the common argument presented here.
I'm not being argumentative, but I am trying to get my hands around the reasoning being repeatedly cited here for these types of situations.FE

I guess the "reasoning" is because the IRS accepts these explanations and the problem goes away -- most of the time. 1099MISC's are often given showing income in Box 7 when it should be Box 3, or some other box, so there are beaucoups of legitimate problems with them and I think in some cases, it just isn't worth it to pursue. However, I agree with you. Work is work, even though most of the time it should be W-2 income and not 1099. And work is subject to SE tax, unless specifically excluded by statute (such as newspaper carriers under 18, etc.)

[JohnH]

And let's not forget SPIFFS, which are generally not subject to S/E tax.
They even have their own dedicated IRS publication.