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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29781
Experience:  Taxes, Immigration, Labor Relations
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My sister does a good amount of work my business and she is

Customer Question

My sister does a good amount of work my business and she is 17 years old. If I paid her a salary, of say, $4,500 for the whole year - would she have to file a tax return or pay taxes of any kind? And, in addition, would I have to pay any additional taxes (payroll) or anything else for paying her this salary? On my tax return what would I be reporting, what information of hers would I have to write down (name, address, SS#? etc) - please be detailed in your response.
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.


Hi and welcome to Just Answer!
Yes - regardless of her age - that will be her taxable income. However - if that woudl be her only income - she is not required to wile her tax return - if you report that income as wages and will issue W2 form for her.


However - if you report that compensation as self-employed contractor and will report it on form 1099MISC - then - she would need to file her tax return - and while she might not owe any income taxes - that income would be subject of 13.3% self-employment taxes.
On your tax return - you will deduct payments as business expenses on schedule C -
Wages are deducted on line 26 and compensations to contractors are deducted on line 11.
You would need to collect from your sister signed form W9 -
Most likely - you will report that compensation on 1099MISC form - because there will be additional overhead for reporting wages and you might want to avoid it.
Let me know if you need any help.


Be sure to ask for clarification if needed.