1099 NEC

[chenschuh]

A high school kid ref for hockey, received 1099 nec from school for 1400. I put it as other income.

Standard deduction become 1250, taxable income become 150.  She has to pay tax for that income.  Doesn't seems right?

[dascpa]

If an NEC and she performed services why would it be other income? It should be on a Schedule C subject to self-employment tax.  Should have been a W-2 but most schools today seem to do it as a 1099-NEC.

And why isn't it right that she pays tax.  I pay tax, so do you. She performed services for a price. Life lesson learned.

[cclark]

I have done several high school and college kids who have an internship or ref football or basketball. I just put it as other income because it is not a business. I have never had any issues with the IRS coming back to the client and saying it's a business. Most likely they will owe tax on the other income as well.

[dascpa]

Not a business - so everyone who does a one-off service gets out of self-employment tax? 

The issue is was it for services rendered, not whether it's a business.

If I receive a commission/referral fee from my realtor for referring a client, a commission is a Sch C item but I'm not in the business of referring clients so it's other income not subject to SE tax.

For $1,400 at probably minimum wage this person worked ~ 100 hours. That's self-employment income.

[BobKamman]

When my kids were still in school the refs were adults and paid in cash.  No 1099 involved, so most probably did not pay tax on it.  Which means kids these days must also contribute to Social Security.

She refs at only one school?  So no mileage costs?  Didn't have to buy uniforms or whistles?  Rule books?  

[IRonMaN]

I had one just last week with a kid being a ref.  Parents were prepared and came in with a list of expenses

[chenschuh]

I put it as other income because this is one time deal. If he continue to do it next year, then it become a business, I would use schedule c.

[IRonMaN]

They pay kids really good money where you are at if $1400 is a one time deal.  That would be a lot of deals around here.

[chenschuh]

Funny I have never noticed that with other income the standard deduction is the same as unearned income. Only when it's in schedule c, it's treated as earned income for standard deduction.