4-H/FFA Youth Auction Proceeds Tax Return Question/Help

1,528 Views | 6 Replies | Last: 5 yr ago by taxpreparer
slop01
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AG
Anybody ever file a tax return for their kids 4-H/FFA Youth Auction Proceeds?

My daughter received a 2018 1099 in the amount of $4385, which is the amount of the check she received from the Fair. Looking for help on how it should be filed or suggestions on where to take it be filed that will have a reasonable fee.
taxpreparer
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When you see stor oh es about ten tax professionals doing the same returm and getting ten different answers, things like this are why.

Either file a return for her with that amount claimed as other income specifically "hobby income" or include a Schedule C and write of the expenses incurred producing the income.

With the $12,000 standard deduction, therecshoild not be any taxes if you show it as hobby income and she has no other income.
***It's your money, not theIRS! (At least for a little while longer.)
UmustBKidding
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Been there, but at least in my daughters case she had a part time job and was already filing. I thought she ended up paying social security on the income, itemizing would have eaten all the revenue but more trouble than it's worth.
Also been through getting paperwork late from Houston livestock show and having to file amended returns.
dubi
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taxpreparer said:

When you see stor oh es about ten tax professionals doing the same returm and getting ten different answers, things like this are why.

Either file a return for her with that amount claimed as other income specifically "hobby income" or include a Schedule C and write of the expenses incurred producing the income.

With the $12,000 standard deduction, therecshoild not be any taxes if you show it as hobby income and she has no other income.

I'd be all over that schedule C with the cost of raising that critter!

And if you didn't save your receipts, no you know that you should in the future.
slop01
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taxpreparer said:

When you see stor oh es about ten tax professionals doing the same returm and getting ten different answers, things like this are why.

Either file a return for her with that amount claimed as other income specifically "hobby income" or include a Schedule C and write of the expenses incurred producing the income.

With the $12,000 standard deduction, therecshoild not be any taxes if you show it as hobby income and she has no other income.

From what I have read if you use Schedule C then its considered a business and therefore you have to pay self employment tax, which is 15.3%? Is that correct?

If you claim it's hobby income and put it on line 21 of schedule 1 you then have to pay federal income tax, which if I am reading it correctly would be taxed at 10%. Is that correct?

If I am correct on both of those items then she is better off calling it hobby income.

taxpreparer
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slop01 said:

taxpreparer said:

When you see stor oh es about ten tax professionals doing the same returm and getting ten different answers, things like this are why.

Either file a return for her with that amount claimed as other income specifically "hobby income" or include a Schedule C and write of the expenses incurred producing the income.

With the $12,000 standard deduction, therecshoild not be any taxes if you show it as hobby income and she has no other income.

From what I have read if you use Schedule C then its considered a business and therefore you have to pay self employment tax, which is 15.3%? Is that correct?

If you claim it's hobby income and put it on line 21 of schedule 1 you then have to pay federal income tax, which if I am reading it correctly would be taxed at 10%. Is that correct?

If I am correct on both of those items then she is better off calling it hobby income.


It is correct, but with Schedule C you can write off expenses and reduce the taxable income. With Line 21 Other income, you cannot write-off the expenses.

I suspect the hobby income route will be best because she will have no taxable income, even without writing off expenses. If you are doing this with a program, try it both ways and see what is best.
***It's your money, not theIRS! (At least for a little while longer.)
slop01
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Thanks TaxPreparer!!
taxpreparer
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Your welcome. Good luck.
***It's your money, not theIRS! (At least for a little while longer.)
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