1099-MISC, Independent Contractors, and Self-Employed
Question: My son is a newspaper carrier. I would like to know if this income is subject to social security and Medicare taxes, and if I must file a Schedule C for him.
Your son may be liable to pay into the Social Security and Medicare system by paying self-employment tax:
Special rules apply to services a person performs as a newspaper carrier or distributor. A person is a direct seller and treated as self-employed for federal tax purposes if he or she meets the following conditions:
- The person is in the business of delivering/distributing newspapers or shopping news, including directly related services such as soliciting customers and collecting receipts.
- Substantially all of the pay for these services directly relates to sales or other output rather than to the number of hours worked.
- The person performs the delivery services under a written contract between the person and the service recipient that states that the person will not be treated as an employee for federal tax purposes.
Carriers or distributors (not including those who deliver or distribute to any point for subsequent delivery or distribution) and vendors (working under a buy-sell arrangement) who do not meet all of the above requirements and are under the age of 18 are generally not subject to self-employment tax. You must determine which set of rules apply to your son.
- Schedule SE (Form 1040) (PDF), Self Employment Tax, must be filed if net earnings from self-employment are $400 or more.
- Self-employed persons report their income on Schedule C (Form 1040) (PDF), Profit or Loss from Business (Sole Proprietorship), or the person may qualify to use Schedule C-EZ (Form 1040) (PDF), Net Profit from Business.
If your son is considered self-employed, he can deduct the employer's equivalent of self-employment tax. and possibly a portion of certain qualifying health insurance premiums.
- Publication 334, Tax Guide for Small Business
- Publication 15, (Circular E), Employer's Tax Guide
- Publication 15-A (PDF), Employer's Supplemental Tax Guide
Category: Interest, Dividends, Other Types of Income
Subcategory: 1099 MISC, Independent Contractors, and Self Employed