Teens & Taxes: My Teenager Received a 1099 for Gig Work — Now What?
Did your teenager work any side gigs in 1099 through established companies? If a company or organization hired your teen as an independent contractor, your teen may have recently received a 1099 form in the mail — or electronically via email. What does it mean? What should they do with it?
A 1099 form is a disclosure of “non-employee compensation.” Companies who pay contract workers more than $600 for the tax year are required to submit the 1099 form to the IRS and to send a copy to the worker before Jan. 31, in preparation for the upcoming tax season.
Prior to 2020, gig workers would receive a 1099-MISC form detailing their income. Now, that income is reported on a 1099-NEC form, which is specifically for “non-employee compensation.” The 1099-NEC form shows the amount of non-employee compensation received and should also indicate that there were no federal or state taxes withheld.
When your teen receives the form, review it with them to be sure all the information is accurate, including their name, address, tax ID number or Social Security number — and, especially, the wages received. You will want to file the form in a safe place — with the rest of your tax paperwork — to reference it when you file.
Your teen does not need to submit their 1099 form to the IRS. But they do need to declare the income on their W-2 form when they file tax returns. If they show net income of more than $400 from 1099 work, they are responsible for paying self-employment tax on the amount. Regardless of how much (or how little) 1099 income your teen made, if they receive a 1099 form they will need to file federal, and possibly state, tax returns.
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