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I am helping out my 25 yo son out of college 2 years. We

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I am helping out my...
I am helping out my 25 yo son out of college 2 years. We give him $1400 per month. Is there a way I could make it look like payment for freelance work so he can build up a credit history. I do not need any tax advantage for myself, just trying to help him out as he makes his way in this difficut world.
Submitted: 1 year ago.Category: Tax
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1/10/2016
Tax Professional: Tax.appeal.168, Tax Accountant replied 1 year ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 3,853
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Receipt of income does not build a credit history. Building a credit history is acquired by actually having credit that reports to the three major credit bureaus. He can start by opening secured credit card accounts that report to the credit bureaus. There are three major credit bureaus, Experian, Equifax, and Transunion. To find secured credit cards that report to these bureaus, he can Google secured cards that report to credit bureaus.

Let me know if I can be of further assistance to you regarding this matter.

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Customer reply replied 1 year ago
Well, I'm not sure that was specific enough for me. I want to know if it would benefit my son in any way if I pay him as a freelancer $1400per month via Paypal or other reputable source, rather that just transferring $1400 per month into his bank account. He got out of college 2 years ago as a sound engineer, living in Atlanta and having a hard time financially. 2 week jobs, here and there. He needs to have a credit/tax presence and I'm not sure how we can help him until more steady work comes his way. In his field, this appears to be fairly typical; and I am the typical parent who only wants to help him out because I still believe in his dream. I want him to be able to prove he at least "makes" $1400 per month. Sad, huh?
Tax Professional: Tax.appeal.168, Tax Accountant replied 1 year ago

YOU:

He needs to have a credit/tax presence and I'm not sure how we can help him until more steady work comes his way.

ME:

Unless he actually works for you, legally, you can't say that he works as a freelancer for you. If you were able to say that the $1,400 was income, you would have to consider him as an employee (having to withhold income taxes), or classify him as an Independent Contractor and issue a Form 1099-Misc. He would then have to pay taxes on the income. Either way, there is tax reporting that will need to be done. Wanting him to prove that he earns $1,400 month will create a taxable event for either you or him. There is actually no other way to do it. He either becomes an employee or an Independent Contractor. I understand your desire to help him, but other than creating a tax reporting event for yourself or him, you can't assist him in the area of establishing his credit or taxes.

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Tax.appeal.168
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