A child (under 16), earns income ($2000) as a model and receives a 1099-MISC from the modeling agency. I assume we cannot include the income on the parent's tax form using 8814 since this is earned income, not interest or dividends.
Therefore, we will have to prepare a separate 1040 for the child. This appears to be straight forward but just wondered if there is anything special we need to be aware of in preparing either child's or parent's 1040?
A quick summary. As you noted, earned income is not subject to the "kiddie tax". Remember to calculate the standard deduction as earned income + $1000 (I think it's $1000 this year). (In other words, money _not_ subject to the kiddie tax, and less than the nominal standard deduction for a single person, is not taxable.)
I would think that a model should be an employee, rather than an independent contractor, as indicated by the 1099-MISC. If the child receives a 1099-MISC, he/she may also have to pay self-employment tax, although I don't think it helps his/her Social Security benefits. At least, _my_ employment before the age of 16 doesn't seem to be on _my_ Social Security record. I'm sure the laws have changed somewhat since then....
-- Arthur L. Rubin AFSP, CRTP, Brea, CA
Using turbotax, there is no taxable income.
The child goes to different clients (Magazine, TV, etc) on jobs which are set up by the agency. Apparently, the clients pay the agency and the agency pays the child so the agency issues the 1099-MISC.
If the child receives a 1099-MISC, he/she may also have to pay self-employment tax, although I don't think it helps his/her Social Security benefits. At least, _my_ employment before the age of 16 doesn't seem to be on _my_ Social Security record. I'm sure the laws have changed somewhat since then....
SE tax is $283, even for a 13 year old!!
Don't forget that if you are filing a schedule C, you get to deduct expenses.
At the least, it would seem that transportation costs could be deductible although that might require the child to reimburse the driver.
For each job, driver is his mother. Drives 40 miles into NYC so there are tolls and parking. Mom also buys lunch. I doubt if there was any reimbursement so it is probably all moot.
I stand corrected. There was reimbursement. All we have to do is assemble the documentation. sigh!
Assuming the child is a dependent of his parents, make sure he does not claim an exemption for himself on his tax return. Do not check the box on 1040 line 6a. Tax software will typically have a box to check to indicate that he can be claimed as a dependent.
Since he is a dependent, he does not report anything about health insurance on his tax return. Whoever claims him as a dependent reports his health insurance status on their return.
Bob Sandler
Thanks for the tip. Turbotax did leave 6A unchecked.
This would suggest to me that the child should be an employee of the agency. But the entertainment industry _does_ have special rules.
-- Arthur Rubin, AFSP, CRTP, Brea, CA
The real estate industry has special rules in the code. I wasn't aware of special rules for the entertainment industry.
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