Gift or Income
2014-03-18 by Eva Rosenberg
Today TaxMama® hears from Asdfgh in the TaxQuips Forum, who tells us. “My daughter plays piano for school choir. Doesn’t ask for money. She gets “thank you” from school PTO in form of flower bouquet and check for a few hundred dollars. Is that taxable income?”
Dear Asdfgh,
Sounds like you have a talented daughter. How delightful.
Anytime someone earns a total of $400 or more in a year, they must pay self-employment taxes on those earnings. So if your daughter earns less than that during the year – no worries.
More than $400…?
She needs to file a Schedule C to report the income on her own tax return. If she spends any of that money on her piano-related expenses, she can deduct those costs. If you spend the money…perhaps she can deduct the costs – if you gift her the funds and let her pay the expenses. (for future reference.)
This is good practice for adult life, I suppose.
And remember, you can find answers to all kinds of questions about stipends and other tax and business issues, free. Where? Where else? At www.TaxMama.com.
[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
Please post all Comments and Replies in the new TaxQuips Forum .
Download the MP3 (0:00min, 2MB) or listen now...
- Ask TaxMama
- Where Taxes are Fun
- TaxQuips
- The #1 Free Tax Podcast Online
- TaxQuips Forum
- Where you can you ask your tax questions
- TaxQuips Forum
- Where you can you can add your comments
