Frank S. Duke, Jr. wrote:

- quote -

Mom is self-employed, so there's no FICA tax. Likely no
requirement for income tax withholding, either, unless the
kids opted to have additional withheld.

- quote -

I'm with you there!

Phoebe

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"Frank S. Duke, Jr." <dukefs[at]one.net> wrote:
- quote -

Hold up a minute there dude. Did the rules change since my
kids worked for me? (And believe me filing the weekly
installments from CCH was work) Last I heard you don't have
to pay social security, medicare, or unemployment on wages
of your children under the age of eighteen. And likely
there was no federal withholding due either.

Jo

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anna wrote:

- quote -

Yes` each child owes some tax, as follows:

Mike (file on 1040, with Schedule D)
Adj Gross Income (AGI) = $5,387
Standard deduction = -4,675
Taxable Income = $ 712
Approx tax due = $ 40

Tom (file on 1040, with Schedule D)
Adj Gross Income (AGI) = $3,525
Standard deduction = -2,730
Taxable Income = $ 795
Approx tax due = $ 42

- quote -

Follow the instructions for form 1040 and Schedule D

- quote -

See the instructions for form 1040 and Schedule D

- quote -

For a dependent minor with both earned and unearned income,
the standard deduction is equal to earned income + $250, as
long as the total is less than $4850. There is a worksheet
in the instructions for calculating this value.

- quote -

http://www.irs.gov

- quote -

Follow the directions, line by line for the forms used, and
check your math.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

anna at annabaum100[at]yahoo.com wrote:

- quote -

This is very shaky. Did she withhold tax from their pay and
make the required quarterly payments of Social Security,
Medicare, Federal, State, and local taxes? Did she issue
W-2s by the end of January of this year as required. Did
she keep records of the hours they worked and pay them on a
regular basis? Are they really employees or is this just a
ruse to reduce her taxable income? I suspect the IRS would
see it as the latter.

- quote -

Generally a good idea if the kids are really employed.

- quote -

Yep, as soon as the investment income went over $800, some
was due.

- quote -

Read IRS publication 17, or use consumer software like
Turbotax or Tax cut or hire a professional tax preparer.

- quote -

Too numerous to discuss.

- quote -

$800 assuming that both boys are claimed as dependents on
her return.

- quote -

Www.IRS.GOV

- quote -

Anna, if you had an inflamed appendix, would you ask
questions like this of a group of doctors in preparation for
trying to remove it yourself. This group is designed to
help people with a basic understanding of the tax code
through some of the more sticky parts, not educate them from
scratch. From the questions you are asking, your sister
needs a lot more help than you can provide. She should seek
out a qualified professional tax preparer, an Enrolled Agent
or a CPA.

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

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"anna" <annabaum100[at]yahoo.com> writes:

- quote -

Since the children has capital gains, she HAS to do returns
for each of them.

- quote -


Dependents do not get a personal exemption and their
standard deduction is limited to the greater of $800 or
earned income plus $250.

So Tom's standard deduction is $2830 while Mike's standard
deduction is $4675.

Since as dependents they have no personal exemption and
since their standard deductions are less than their incomes
they will have to file and will have tax due.

However, since each child's investment income is under
$1600, the "kiddie tax" does not apply to either of them.

- quote -

Yes.

- quote -

Follow the instructions for the tax forms. I'm not trying
to be flip, but the instructions say exactly what you have
to do.

Generally speaking, you'll fill the front of the form out
"normally" (as you would for anyone else). On the back of
the form, the number you put in for the standard deduction
is as above (and the instructions for that line of the form
will refer you to a worksheet where you compute the standard
deduction for dependents) and since they, as dependents,
were unable to claim any personal exemptions on the front of
the form, the personal exemptions line on the back of the
form will be left blank.

Aside from that, you proceed normally with the rest of the
return, including the tax computation, as the "kiddie tax"
does not apply to these kids given what you've said.

- quote -

Same as for anyone, since the "kiddie tax" does not apply.
Aside from that (and not being able to claim personal
exemptions), the rules are the same for those kids as for
any other taxpayer.

- quote -

Same as for anyone, except that the standard deduction is
reduced and personal exemptions are not allowed.

- quote -

www.irs.gov. Look at Publication 17, which is a great
reference in general.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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I am helping my sister with her taxes and need some help.
This is for year 2004. She has an extension.

She is self employed.

She has 2 sons under 14 years. She employs them to do minor
office chores.

She prefers to do separate tax returns for each of her sons.

The income of the 2 boys is approx:

Tom ( 11 years )
************************
Cap gains $745
Dividends $ 300
Wages from his mom's business $2480

Mike ( 13 years )
**********************
Cap gains $ 632
Dividends $ 330
Wages from his mom's business $4425

Can anyone pls help me..

1. Is any tax due ?
2. How to calculate any tax....?
3. What are the rules?
4. What are the deductions?
5. Any web site that will give details on how to deal with
this situation...
6. Any other relevant pointers / info.

Thanks
Anna

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >