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5 Answers

Does my sister have to file taxes?

Asked by: Jesica Hogan 2121 views YA Discussion

She is a student living off her financial aid (federal loans and grants) mostly, but she works from home on Mechanical Turk for some extra money. Their rules are if you earn over $ 600 with one requester they send you a form. She got one that says she had $ 834 “non-employee compensation.” Her total earnings on MTurk for 2011 were $ 1,168.41. Does she need to file?
MTurk doesn’t hold out taxes so she wouldn’t be getting a refund.

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5 Answers

  1. tro on Feb 02, 2012 Reply

    she files this self employment income on SchC and if the ‘net’ amount is $ 400 or more on SE as well to calculate the self employment tax
    of course there is no refund and if she has self employment tax, she will need to pay that

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  2. Wayne Z on Feb 02, 2012 Reply

    Yes, she has to file.

    The filing requirement for self-employed persons is only $ 400 for the year.

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  3. SmartA$$ on Feb 02, 2012 Reply

    Yes, she is legally required to file.

    The IRS treats this as self employment income and she’s required to file if her total self employment is $ 400 or more BEFORE expenses.

    The IRS will get a copy of the 1099-misc form for the non-employee compensation. If they don’t get a tax return from her they’ll be sending her a letter sometime this summer or fall to inform her that not only does she owe some taxes, but penalties and interest have started adding up.

    She needs to report ALL of her self employment income on schedule C even the amount that she doesn’t get on a 1099 form. She’ll use schedule SE to compute her self employment taxes and she needs to send her tax payment before the April 17th due date to avoid interest and penalties.

    Also, if her grants and scholarships exceed the amount of her eligible tuition and education expenses a portion of them could be taxable. If she paid any tuition out of pocket or with loans she might qualify for an education credit that can count toward her self employment taxes and possibly even give her a refund even if she didn’t pay any taxes.

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  4. Bostonian In MO on Feb 02, 2012 Reply

    Yes, she needs to file since her self-employment income is more than $ 400.

    She files Form 1040 and attaches Schedule C or C-EZ. If the net profit is $ 400 or more, she attaches Schedule SE to figure the self-employment tax. She won’t owe any income tax at that earnings level. If the $ 1,168.41 is her net profit, she’ll owe $ 144 for self-employment tax.

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  5. byran on Nov 03, 2012 Reply

    Great to see so many professional and accurate answers to this particular problem. I got the similar situation.

    Moreover, Anyone knows the taxing rate for the so-called self-employment income? Maybe it’s not impossible to calculate that without looking into the tax tables, but I like to see, taking the posted case of net incoming 1,168.41$, about how much did she pay for tax?

    Thanks a lot.

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