Taxpayer asks:
A not for profit hosted a competition in which my 11 yr old daughter won $500.
In order to write her the check, They have asked to have her complete a W-9.
I thought that since:
1. The value is below $600
2. She is a child that will not be filing a return
2. She is a child that will not be filing a return
That she would not need to provide her SSN to these folks
Do I need to provide them a W-9 on her? And if they chose to 1099MISC her for that amount, is there anything I need to do, or is the amount low enough that she would be exempt from filing a return?
taxgirl says:
This is a great question! There are a lot of issues here…
First, you’re absolutely right that a form 1099-MISC need only be issued when the amount is $600 or more. However, for bookkeeping purposes (and to protect them from potential penalties later on), many companies request that you complete a form W-9 prior to receipt of any money. From my perspective, there’s no harm in it and if it were my daughter, I wouldn’t fight it since I don’t know what it gets you (other than some agita and perhaps whining from your daughter). Keep in mind that the company doesn’t know that your child might not have to file a return since the rules vary depending on the type and amount of income (keep reading).
Second, whether a form 1099-MISC is issued or not, money paid out as a prize or award is generally reportable even if it’s not taxable. Be sure not to confuse the two.
If your daughter has earned income of less than $5,700 for the current tax year, she does not have to file a federal income tax return or pay federal income tax so long as she is single (as I hope she would be at age 11) and under the age of 65. Earned income includes wages and salary: it generally includes prizes and awards assuming that you have to do something to win.
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