- quote -

Actually if he is able to be claimed as a dependent on
anoother's tax return, it would be lower than 4850 in this
example, It would be net Sch C profit plus 250.

This does make a difference if he has capital gains
carryover or has lots of interest or dividends or capital
gains etc.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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rick++ wrote:

- quote -

To be clear about it, it's not a choice to do the above
just so he can fund a ROTH, but a filing requirement
independent of the ROTH.

ChEAr$,
Harlan Lunsford, EA n LA

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JoeTaxpayer wrote:
- quote -

I was mistaken;
He gets the full standard deduction, in 04 it was $4850.
You may want to see http://www.irs.gov/pub/irs-pdf/p929.pdf
To get it from the horse's mouth.
BTW, the ROTH is a great idea, no tax going in, none at
withdrawal. He's on his way to a nice, early retirement.

Sorry for my confusion.
JOE

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"Herb Smith" <smithff33[at]aol.com> wrote:

- quote -

Everyone but me seems to think this is self-employment, but
I don't see the facts to support that conclusion. One thing
is sure: working for more than one person doesn't
automatically make you self-employed.

If he's passing out leaflets, going door-to-door soliciting
business, etc., I'd consider the possibility of
self-employment. I say possibility because, regardless of
how many people you're doing it for or how you got the jobs,
babysitting in the parents' home is textbook
employer/employee. If the neighbors came over and asked him
to do some work, to me that would lean toward
employer/employee, albeit FICA exempt in this case.

--
Phil Marti
Clarksburg, MD

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JoeTaxpayer wrote:
- quote -

The standard deduction of $800 is only for unearned income.
His standard deduction in this case is $1200 + $250, which
is more than enough to eliminate federal income tax.

As to Turbotax, remember GIGO (garbage in, garbage out).

- quote -

This is not a "nanny tax" situation, as he is working as an
independent contractor, not an employee of any neighbor. He
will owe SE tax on his net earnings.

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JoeTaxpayer <JoeTaxpayer[at]nospam.com> writes:

- quote -

No, he has a MAX($800, earned income + XXX) standard
deduction. (I think XXX is $250 these days, but I
haven't checked it)

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

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Kris & Pam Hutchins wrote:

- quote -

Congratulations on teaching him the value of saving for his
future!

- quote -

Since he performs these services for (actually or
potentially) multiple neighbors, he is not their employee,
but is acting as an independent contractor.

- quote -

Technically, he should have been considered an "employee",
as they are defining the job and telling him what and how to
do it. By issuing a 1099-MISC form (instead of a W-2) they
are escaping responsibility for paying their share of SS and
Medicare taxes on this income (about $46), which he will
have to pay.

- quote -

Under the current scenario, the entire $1200 will be shown
as gross income on a Schedule C. If he has any expenses (gas
for mower, etc), that will reduce his profit - and the
amount that transfers to his 1040 form. The net profit can
be contributed to a Roth IRA. The only difficulty might be
finding a custodian to open a Roth IRA account for a minor;
look around, you will find one.

- quote -

That is correct.

- quote -

Possibly, although probably only the SE tax. If he files on
Schedule C and has no expenses to claim, the $1200 goes on
Schedule SE. The self employment tax is $170.

- quote -

None I can see.

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Kris & Pam Hutchins wrote:

- quote -

Yes.

- quote -

Yes.

- quote -

No income tax liability, but will owe self employment tax,
calculated on a shedule se filed with his schedule c along
with 1040.

- quote -

Nope.

- quote -

You have a good son, and one I dare say has been "raised
right", as we say down South.

ChEAr$,
Harlan Lunsford, EA n LA

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Kris & Pam Hutchins wrote:

- quote -


1) Yes
2) Yes
3) Yes. At 15 he files his own return, and has a $800
standard deduction as you and the missus have his exemption.
On (1200-800) he'd owe about $40 in tax (my turbutax said
$41, I don't get it)
4) No, the ammount for each is too small for Nanny Tax to
kick in. Been there, done that, I forget exact number, but
it's far more than the $2-300 per neighbor). As for proof,
the IRS will be happy to take the tax, but the need to pay
into FICA is the one thing I don't know.

JOE

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"Kris & Pam Hutchins" <khutch[at]nospamwideopenwest.com> writes:

- quote -

Yes.

- quote -

Yes.

- quote -

He won't have any income tax (assuming this is his only
income), but he will have self-employment tax on the $1200
(he'll have to file a Schedule C-EZ and Schedule SE with his
return)

- quote -

Maybe, maybe not (depending on how much any one person paid
him), but that's irrelevant to your son -- he should report
what he received whether or not the neighbors 1099 him.

- quote -

Probably not -- from what you've said it souds like he's
been an independent contractor to them, not an employee.

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

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Sure. You'll have to consider this as "earned" income to
qualify, fill out schedule C and pay 15.3% self-employment
tax and any particular taxes your state might inflict such
as CA SDI. Otherwise he probably doesnt have enough income
for federal income tax.

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My 15 year old son is interested in opening a Roth IRA. So
far he has earned $1200 in 2005 broken down this way:

$600 in cash earnings by doing jobs (shoveling driveways,
mowing grass, raking leaves, etc.) for various neighbors in
our development.

$600 from my wife's employer. They needed someone to come
in and do the jobs that no one wanted to do (moving boxes,
filiing, etc.) This was a one time opportunity. He will
receive a form 1099-misc.

Now my questions:

1) Can he put the entire $1200 in a Roth IRA?
2) He will be claimed by my wife and I on our Joint 2005
return as a dependent. I assume he will have to file a
fed return, correct?
3) Assuming he does have to file a fed return, will he have
any tax liability?
4) Would the neighbors have to provide my son with any proof
of his earnings?.......any Nanny Tax considerations for
the neighbors to deal with?

Thanks in advance for your help. I'm pleased that my son is
interested in opening an IRA (my other kids wouldn't even
think of it), but we don't want to open a can of worms if it
is going to be more trouble than it's worth.

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