Taxes Help?

Question

Lets say I receive $10,000 or more today or within the month or within the year from self-employment(I work for myself). I'm also a dependent, full time college student, under 23, never filed taxes before, and live in Texas.

1. What form or forms do I have fill out?
2. Since I'm a dependent do my parents fill out something as well?
3. When do I and/or my parents have to report it?
4. What is the limit I can make before I am no longer considered a dependent?

I thank all that help me find out this information.

Thanks all. I think I have enough information now.

Answer 1

1. You would fill out a federal form 1040, and schedules C and SE for your self-employment income, at the end of the year. You'd also file estimated taxes on form 1040ES each quarter.

2. Your parents would do their normal tax return, and claim you as a dependent. They do not show anything about your income on their return.

3. You would make quarterly estimated payments, and file a tax return sometime between January and mid-April of the following year.

4. There's not a particular amount you can make and still be considered a dependent. If you provide over half of your own support, then you'd no longer be considered a dependent. There's a worksheet on page 32 of IRS publication 17 to calculate who paid what part of your support.

Texas doesn't have a state income tax, so you don't have anything to file there, just federal.

Answer 2

1. Are you an independent contractor? Your employer(s) should issue you a 1099-MISC, which you will use when filing your income taxes. You also need to add any other income, and file 1040 Schedule C and SE along with your 1040.
2. Your parents will just continue to list you as a dependent, IF they continue to supply more than 50% of your support.
3. At tax time, by April 15 next year.
4. See 2 above.

The IRS website is a good resource; also speak with a tax preparer for complete information.

Answer 3

First, there are a lot of things you will need to learn (or hire a tax professional to do for you), and you can get a good start with the IRS' guide to taxes for students, at:
http://www.irs.gov/individuals/students/index.html
Even if you hire a professional to do your tax returns, you're better off understanding your situation and planning.

You may also want to peruse Publication 929, covering the rules for dependents, available at:
http://www.irs.gov/publications/p929/ar02.html#d0e1678

I believe that Texas does not impose a personal income tax, and you could call 800-252-1381 for info.

For federal income tax, to report income from self-employment, you normally file a Schedule C or C-EZ, and you need to pay both income tax and self-employment tax (which is a substitute for the social security tax you would have had withheld if you had been employed). This gets attached to your Form 1040, which reports your income summary.

If your parents can claim you as a dependent, this gives them a tax saving, but limits your "standard deduction" if you don't have over about $5,000 earned income (which you have), and it means that you cannot claim a personal exemption (an amount of income, $3,300 last year, that is exempt from tax).

You may have heard of the "kiddie tax", which requires parents to report a dependent child's investment income on their return, and I believe Congress just extended this to some older-age student dependents; last year, it only went to age 17. So, your parents might have to report investment income that was in your name.

It's probably important for both you and your parents to determine whether you are or are not still a dependent. To qualify as one, there are several tests, but one of them is: you must not have provided more than half your support during the year. "Half of your own support" is effectively the income limit at which you can no longer be called a dependent (assuming you're still young enough, a student, and satisfy the other tests).

When to report your income? If you expect to owe some tax, you need to do quarterly estimated tax payments, to avoid any underpayment penalty (with some exceptions, including one if you had no tax liability the previous year). You need to file the tax return for income earned in 2007 by mid-April of 2008.

There are a lot more details, but this should give you an overview.

Answer 4

1. Schedule C to calculate the net profit. Schedule SE to calculate the self-employment tax at 15.3% of the net profit, and of course, Form 1040, your tax return.

2. Your self-employment income has no impact on their return, assuming that they can still claim you as a dependent.

3. You must file your return by April 15th. However, if you expect to have a tax liability in excess of $1,000 then you must also make quarterly estimated payments to the IRS using Form 1040-ES. You can get copies from the IRS website.

4. Your income, per-se, has no impact on your dependency status. As long as the age, support, citizenship, and residency tests are met your parents can claim you as a dependent regardless of how much you earn.

Answer 5

I have been a tax accountant for 27 years. "Boston" is correct. I would only add that when you prepare your tax return (or have it prepared), make sure you do not claim an exemption for yourself. This is because your parents are entitled to claim you under the student/child rules. Be aware that even if your parents choose not to claim you as their dependant, this will not change things: the fact that they are ENTITLED to claim you is the determinative factor.

I would also strongly urge you to hire a tax professional. Trying to do it yourself or with assistance from a non-pro will likely result in both errors and omissions costing you many times more than the professional fee.

Answer 6

We had no National Debt 9 years ago. If my history serves me a republican came into office and changed all that. 100 years ago these things did not exist. 100 years ago it was 1908 and Taft was President. Well remembered for his 4 years. I am trying to think of the term that would be used if the US had maintained ownership of all this infrastructure and owned the sole share of an industry. Darn - what is the opposite of free trade and capitalism. In 1907 there was an event called the Panic of 1907, also known as the 1907 Bankers' Panic. Sound familiar? My opinion is when you read propaganda like this use that spark to read the history and seek facts. Why was this worth posting? In my opinion posting and emails like this help to spread ignorance.