Any Tax Experts here? Need quick help

Parent Cafe
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<p>I am a parent asking about son’s filing status, he is a student in first year college (started fall 2010) so this is about his 2010 tax return.</p>

<p>Since he had some project income, should we file his taxes? He is not claimed as a dependant on my return as I have no income. His income is way less than $9350 but when I tried using Turbo tax it says he has to pay over 300$!!</p>

<p>There is some interest income, not much, but nothing else. Total income is 5,000 max.</p>

<p>He is working this year and so I thought its better to start with the filing. He got 1099 from the Co., he did work for last year. Thanks for helping! You can PM me or post here.</p>

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<p>If he got a 1099 then he is an independent contractor. As such he needs to pay social security tax even if he has no Federal Income Tax liability.</p>

<p>Go on Turbo Tax and bring up the form - see where the liability is on the form. If it is under Self Employment Tax - this is Social Security.</p>

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<p>^ Thanks!! Will go back on it and see where the ‘Tax Due’ is coming from, its around 300/- but I could not click on it to view what it was.</p>

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<p>JustaMom is correct. It’s not Federal income tax he’s paying, but self employment tax. Did he not realize that they did not withhold anything from his paychecks? Kids need to be told that if they make $8 an hour, work twenty hours and their check is for $160 that they are going to end up owing at the end of the year if they make more than $400.</p>

<p>Technically, he can’t even claim himself since he probably does not provide more than half of his support. And even if you don’t make any money, it may pay to file a return and claim him if your American Opportunity credit will give you the refundable part which can be up to $1,000.</p>

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<p>I believe the OPs son is a college student. That being said…the parents are probably providing more than half of his support.</p>

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<p>So, it makes sense for me to file him as a dependent and get the $1000? He still has to file a return for last year in order to pay the SS tax I assume.</p>

<p>Yes in 2010 I was his provider, but for this year he is paying for his own rent & expenses from his salary. He is on LOA from college.</p>

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<p>Yes. Assuming you paid for tuition out of pocket or through loans. Not it’s being paid from scholarships or grants. Only the parent can get the AOC. He wouldn’t get the $1,000. </p>

<p>For this year, make sure he’s working for someone that withholds, or set aside money to pay the tax. </p>

<p>What is LOA?</p>

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<p>LOA - Leave of Absence. Yes, this year since Jan he is getting taxes with held - he is working as a full time employee. </p>

<p>We did not claim any Fin Aid for his fees even though husband was unemployed during the entire 2010.</p>

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<p>“There is some interest income, not much, but nothing else. Total income is 5,000 max.”</p>

<p>then he does NOT need to file.</p>

<p>Download this form from IRS.gov
1040EZ instructions 2010</p>

<p>Look at page7 - </p>

<p>"Chart B— For Children and Other Dependents
If your parent (or someone else) can claim you as a dependent, use this chart. To find out if your parent (or
someone else) can claim you as a
TIP
dependent, see Pub. 501.
File a return if any of the following apply. · Your unearned income1 was over $950.
· Your earned income2 was over $5,700.
· Your gross income3 was more than the larger of—
· $950, or
· Your earned income (up to $5,400) plus $300.
1 Unearned income includes taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment compensation, taxable
social security benefits, pensions, annuities, and distributions of unearned income from a trust.
2 Earned income includes salaries, wages, tips, professional fees, and taxable scholarship or fellowship grants.
3 Gross income is the total of your unearned and earned income.</p>

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<p>menloparkmom - he actually DOES need to file - he received a 1099 rather than a W-2, which means that he (probably illegally) was classified as an independent contractor rather than an employee. He will need to file a 1040, Schedule C (probably can do schedule C-EZ) and Schedule SE (ore SE-EZ). Any “independent contractor” (again, very often a lie and illegal on the part of the employer) who makes more than $400 (IIRC) needs to pay self-employment tax (FICA, aka Social Security and Medicare).</p>

<p>It doesn’t matter whether he meets the income threshold for owing <em>income</em> tax - he still needs to file and pay the self-employment tax.</p>

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<p>Pixel: Which 1099 did your son get? Is it 1099-INT (interest from investments, which is UNEARNED income) or 1099-MISC, Self-emloyment income? The answer will depend on the form.
If the form that he got LAST year was the latter, this is what the IRS says self-employment taxes:
[1099-MISC</a>, Independent Contractors, and Self-employed](<a href=“http://www.irs.gov/faqs/faq/0%2C%2Cid=199741%2C00.html]1099-MISC”>http://www.irs.gov/faqs/faq/0%2C%2Cid=199741%2C00.html)</p>

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<p>TurboTax (the free one) completed a 1040EZ for DD, but IRS instructions said she should file the 1040A, so I had to go to the IRS website itself to read instructions and download the forms. Lesson: TurboTax is not infallible. I don’t think there would have been a practical difference in her case, but nonetheless I found it troubling. YMMV.</p>

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<p>

The odds of him being a true independent contractor seem pretty low.</p>

<p>If it’s not burning a bridge, call them up and demand he be given the employer portion of FICA, or else you will file a complaint with the state and the IRS. Complaints about payroll violations are taken pretty seriously.</p>

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<p>momcat, the OPs’ son was a full time student at USC in 2010, as was my son. I know the OP from the USC forums. He was NOT an independent contractor. He probably got some funding $$ from USC for summer research or something related , as mine did during the past 2 summers, which is what the 1099 refers to. USC does not withhold taxes from those payments. If that money does not exceed $ 5700 then he does NOT need to file.That’s what the IRS says. Period.
I just walked my son through the whole process this week, when he actually DID have to file ans pay taxes because his total income last year was $9500 , including the $7500 he received from USC for summer research and a Provosts fellowship…</p>

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<p>agree with menlopark.
Sounds like and appears to be a ‘stipend.’ a strange duck.</p>

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<p>

Perhaps the OP can clarify. In the original post she said that her son worked for and got a 1099 from a company, rather than from his university. This may make a difference to the treatment. If this was considered some sort of self employment then the cut off for filing is much lower ($400).</p>

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<p>swimcatsmom, again he did not earn more than $$5700. According to IRS rules as copied below, he does not need to file.</p>

<p>Chart A— For Most People
IF your filing status is . . . AND your gross income* was at least . . . THEN . . .
Single $ 9,350 File a return
Married filing jointly** $18,700 File a return
<em>Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from
sources outside the United States or from the sale of your main home (even if you can exclude part or all of it).
*</em>If you did not live with your spouse at the end of 2010 (or on the date your spouse died) and your gross income was at least $3,650, you must file a return.</p>

<p>Chart B— For Children and Other Dependents
If your parent (or someone else) can claim you as a dependent, use this chart. To find out if your parent (or
someone else) can claim you as a
TIP
dependent, see Pub. 501.
File a return if any of the following apply. ·
Your unearned[1] income was over $950.
Your earned income [2]was over $5,700.
Your gross income [3]was more than the larger of $950, or
Your earned income (up to $5,400) plus $300.
1- Unearned income includes taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment compensation, taxable
social security benefits, pensions, annuities, and distributions of unearned income from a trust.
2- Earned income includes salaries, wages, tips, professional fees, and taxable scholarship or fellowship grants.
3- Gross income is the total of your unearned and earned income.</p>

<p>Chart C— Other Situations When You Must File
You must file a return using Form 1040A or 1040 if any of the following apply for 2010.
· You received any advance earned income credit payments from your employer. These payments are shown in box 9 of your
Form W-2.
· You figure your standard deduction using Schedule L. (But you must use Form 1040 if you claim the additional standard deduction for
certain net disaster losses).
· You owe tax from the recapture of an education credit (see Form 8863).
· You claim a credit for excess social security and tier 1 RRTA tax withheld.
· You claim a credit for the retirement savings contributions credit (saver’s credit) (see Form 8880).
You must file a return using Form 1040 if any of the following apply for 2010.
· You owe any special taxes, such as social security and Medicare tax on tips you did not report to your employer or on wages you received
from an employer who did not withhold these taxes.
· You owe uncollected social security and Medicare or RRTA tax on tips you reported to your employer or on group-term life insurance.
· You had net earnings from self-employment of at least $400.
· You had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security
and Medicare taxes.
· You owe tax from the recapture of the first-time homebuyer credit (see Form 5405).
· You owe tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. But if you are filing a</p>

<h2>return only because you owe this tax, you can file Form 5329 by itself.</h2>

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<p>Wouldn’t this apply in the OPs situation? From what I can gather, the OP was talking about income reported on a 1099 rather than a W-2.</p>

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<p>I think I recall reading that the OP’s S did contract programming work during the last year. This is what led to the LOA to accept a full time position.</p>

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<p>

Melonparkmom: There are several situations where you do have to file when income is below $5700. They are listed in chart C that you posted above:

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<p>Certain income such as home based selling stuff like makeup, kitchenware etc generates a 1099 and must be reported as self employment income. Income of over $400 from such sources does require a tax return in order that the recipient pay social security taxes etc.</p>

<p>I have no idea what the OPs son’s income consisted of, but it certainly is possible that he is required to file a return. Without knowing the source of the income it is impossible to say for sure.</p>