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QUESTION: John,

I have two sons that have begun mowing lawns for some people in the neighborhood. Last year they earned around $3-4,000.00 Each. I have received different answers to this from qualified people but am not convinced either way yet.

I believe they qualify as Household Employees under Publication 926 as they are both under 18 and full time students performing yard work. As they do not earn more than $2,000.00 from any one customer I believe both they and the people hiring them are exempt from paying Self employment taxes. Also, as they are below the Standard deduction of $6,300.00 I don't believe they need to file a return according to Publication 929.

I have been told by others that since they earned more than $400.00 they need to file their income taxes and also pay Self Employment taxes. So who is right? PLEASE HELP!!!!

ANSWER: Kurt,

Thanks for your question.

They are not employees of those whose lawns they mow, but rather they are independent contractors. Age is not a factor here. I have a lawn service mow my lawn. He is not my employee but in business for himself. Your kids are similar to him.

They should file a Schedule C, reporting their income and deducting any costs incurred in the business, paying self-employment taxes on the net profit.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: Publication 926 States: "You have a household employee if you hired someone to
do household work and that worker is your employee. The
worker is your employee if you can control not only what
work is done, but how it is done."  

The customers direct how often the job is done, the length of cut they desire, and whether to skip certain areas or not - each customer directs and instructs them differently so to me they pass the employee control test.

Additionally Publication 926 specifically lists a yard worker as an example of a household employee - so the type of work is specifically mentioned.

Additionally Publication 926 states: "If you pay the employee less than $2,000 in cash wages in 2016, none of the wages you pay the employee are
social security or Medicare wages and neither you nor
your employee will owe social security or Medicare tax on
those wages."

Finally 926 States:  "Wages not counted.... Don't count wages you pay to
any of the following individuals as social security or Medicare
wages, even if these wages are $2,000 or more during
the year."

And then under the wages not counted category they state:

4. An employee who is under the age of 18 at any time
during the year. Exception: Count these wages if
providing household services is the employee's principal
occupation. If the employee is a student, providing
household services isn't considered to be his or
her principal occupation.


I don't understand why they are considered independent contractors when they are clearly full time students working under the specific direction of a few individual homeowners in an area that is specifically stated as an example in Publication 926.

Thanks for your further clarification.

Answer
You are trying to make it fit your situation. One key is your words "a few individual homeowners." They can't very well be an employee of a host of employers. Yes, being a student is their principal occupation but that does not preclude them from operating a part-time business. Publication 926 is about household employees. You are trying to make them consider themselves employees. Ask the people who's lawns they mow. Doubtful hey would consider them employees.

John Stancil, CPA  

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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