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Merlo
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I am a contractor(no taxes taken out) for someones business

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I am a contractor(no taxes taken out) for someone's business and was paid throughout the year. I know the IRS will consider me as "self-employed"- I paid my 14 year old and 18 year oid during bigger projects -one in the summer time- one in the fall. If I don't have a particular business set up but am considered self employed how can I show payment to them on 1099s? Do I just use my name and social security number as the business name?
thanks
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.

Hello paralegal,

 

Yes, that is all you need to do. The form you would issue them is the 1099-misc and report their earnings in box 7 of that form. Refer to the following 1099 instructions on page 8, Item K, which explains that sole proprietors who have no need for an EIN number should just use their SS number for 1099 reporting.

 

http://www.irs.gov/pub/irs-pdf/i1099gi.pdf

 

 

If this was helpful please press the Accept button. Positive feedback is also appreciated.

 

Thank you paralegal

 

 

Customer: replied 4 years ago.
Thank you- so many things to read I guess I didn't know the answer was right in front of me. Now, box 7 usually gets you charged as a self employment tax but will be kids be considered that as well if they only worked a couple of projects earning $2500 and $5500?
thanks!
Expert:  Merlo replied 4 years ago.

Hello again paralegal,

 

Any income from self employment of $400 or more for the year must be reported because of the SS and Medicare taxes which are due. In your particular case, neither of them will actually owe any income tax because they will each still be allowed to claim their standard deduction of $5,700. I assume you will still claim them as dependents on your own return, so they cannot also take their own personal exemption. But the standard deduction will still be allowed and this will end up leaving them with no actual taxable income.

 

Also, wages that you pay to your children to help you in your business are not subject to SS and Medicare taxes if the child is under the age of 18. So your 14 year old should not end up owing any taxes at all. But the 18 year old will end up paying just the SS and Medicare taxes due on the amount he earned.

 

If this was helpful please press the Accept button.

 

Thank you paralegal

 

 



Edited by Merlo on 3/1/2010 at 3:46 PM EST
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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