Claming cash income from summer jobs without W-2?

Question

I am helping my brother with his taxes, and he needs to claim his summer income from our dad because he put the money into his Roth IRA (smart kid!) and you are only allowed to put money into a Roth that is equal or less than your earned income. How does he claim this money as income without a W-2 or is there some sort of W-2 he can have our dad fill out for him to claim it. Its payment for building a retaining wall on his property and of course he has no tax id etc. Thanks!

Answer 1

He'd show the income on a schedule C or C-EZ, then use a schedule SE to calulate self-employment taxes. The numbers from the bottom of both of these will transfer to a 1040 form.

Answer 2

Dad gave the son money for building a retaining wall at the family home? Is the son a dependent? A family member doing home improvements and receiving payment from another family member would not be income.

If the property is Dad's home but the son is not living there and is in the business of building retaining walls, then the money is earned income.

Is Dad's property business property? In this case, the income is earned income regardless of the son's filing status.

If the son has income, he shows it on Schedule C. He will have to pay Social Security and Medicare taxes (total 15.3% of the net income). There is an adjustment to the income of approximately 1/2 of the Social Security and Medicare taxes. This adjusted income is what can be deposited into the Roth IRA.

Answer 3

He needs to file a tax return with Schedule C to account for the income and any business expenses against the income. If the total profit was $400 or more, he must also file Schedule SE and calculate the Self-Employment tax. That is assessed at 15.3% of the net profit from the business activity.

Answer 4

He can report this income on Schedule C as a self-employed taxpayer. No form is needed from your dad.