Back in 2016, I made a net profit of <$400 teaching kids piano in my neighborhood. On the IDOC, I filed a W2/1099 substitute for this income.
This is what Cornell sent to me today:
"According to IRS Publication 501, individuals must file a tax return if net earnings from self-employment were greater than or equal to $400. To determine whether you must file a 2016 tax return, please complete IRS form Schedule C first. If, after deducting expenses related to your self-employment, your net earnings are $400 or more, you must file a tax return with the IRS and submit a copy to our office.
If your net earnings are less than $400, submit a copy of your Schedule C to our office, along with an explanation of how you were paid, such as “paid in cash” or “paid by check”, etc."
I am confused. Do I include it in my parents’ 2016 tax return and refile/send to Cornell, do I just submit a Schedule C to Cornell, or something else? I’m not very sure because I am a dependent of my parents and don’t need to file a tax return to the IRS/report profits less than $400. Thanks!!
It’s earned income for you, not your parents; any required tax filing needs to be done in your name. Follow the instructions from Cornell and complete and submit to Cornell a copy of schedule C, along with the requested explanation.
Just fill out the Schedule C, put in how much you made from the lessons, any expenses (travel to the student’s home, teaching books, stickers) and if the total is under $400 you’re good. If the total is over $400, you’ll need to file your own return.
Oh this brings back memories. When my son was applying to college a few years ago, the people in Cornell’s financial aid department seemed perpetually confused and/or angry. Self-employment income especially seemed to trigger them. Just fill out the forms they ask for and be prepared for them to send you the same request for the same information after you have submitted it. Patience (and a sense of humor) are essential.
I’ve heard that once you are admitted the financial aid process goes a lot smoother so don’t let it turn you off the school.