I have a client coming this week that has a child with a paper route, sounds simple except,the the 1099 is in the name of the parent. The question is this: Can I just do a return for the child with a Sch C, or should I do a Sch C for the parents showing the child as contract labor? I know the newspaper insist on having the account in the parents name but in reality the paper route belongs to the child. Thanks for any advise you may offer.
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Since the 1099 has the parent's SSN on it, you have to do something on the parent's return, otherwise IRS will send you a letter.
I would put it on a Schedule C and zero it out under contract labor for the parent, and then file a 1040 for the child and put the money on line 21 (not a Schedule C), since a kid under 18 is not subject to SE tax on paper route income.Last edited by Bees Knees; 02-19-2008, 08:22 AM. -
About the expenses
Would then use all the related expenses on the parents Sch C and the "profit" to contract labor?Comment
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Only if the parent actually paid the expense.Comment
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Under standard deduction
If the amount on the 1099 is under the standard deduction for the child, it would zero out anyway. No need to worry with expenses.
Linda FComment
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Proseries
I have reached a point where I have completed the very difficult task (Ha Ha) of a 15 year old's paper route. I have follow the advise of Bees and have tried to enter his 1099 income on line 21 the software wants to count it as investment income. In reality it should almost wash out all income and tax liability $5700 earned income and about $50 interest income. The question is: Am I missing a check box or a switch somewhere? I know, the simple answer is just don't fill out the form, but I would like the parents to have it for their records as well.
The kid should have tax due of about $45.Comment
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Try entering the kids income on line 21 without using the 1099 input worksheet.Comment
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Tried that
too, I think I 'll have to call tech support. If they don't have a solution I may have to just print it have them mail the return. Thanks BeesComment
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Solution
I just got off the phone with tech support. The solution to this problem is to right click line 7, crossreference to wages and income, put amount on line 9 there and all is well. Thanks Bees, for all your help.Last edited by LawrenceGR; 02-25-2008, 04:41 PM.Comment
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