Readers’ Q & A

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My daughter earned about $500 for part-time work this summer.  Will she have to file a tax return?

She should if the company treated her as an employee.  If they instead treated her as an independent contractor, she will not even receive a 1099.  The company is not required to send a 1099 since the amount is under $600.

Your daughter will not owe income taxes since her standard deduction will shelter her earnings.  But if she receives a 1099, she will have to file a return with a Schedule C (a business return) and pay self-employment tax.  This is required if you receive more than $400 in 1099 income, even if the company doesn’t issue you a 1099.

If the company sends her a W-2, she may have to file a return to receive a refund of any federal income taxes withheld.


Can my wife and I both claim a home office deduction for both of our separate businesses?

No.  To qualify for the home office deduction, the space must be used regularly and exclusively for business purposes.  If you’re both using the space, it isn’t being used exclusively for either business.

However, if you divide the space or have separate areas and meet all of the other home office deduction requirements for each business, then both of you will qualify for the home office deduction.