Help with teenager's taxes: FreeTaxUSA and reporting dog sitting income without W-2

This is actually a common situation with teenage side hustles. Your daughter's dog sitting income is considered self-employment income, which needs to be reported differently than W-2 income. In FreeTaxUSA, you'll need to create a Schedule C for her business activities. Look for the "Self-Employment/Business Income" section (sometimes under "Income" in the main menu). There, you can report all her dog sitting income as business revenue. She won't need any formal business name - she can just use her personal name as the business name. Once you complete the Schedule C, FreeTaxUSA will recognize this as earned income that qualifies for the Roth IRA contribution. The software will also calculate her self-employment tax (Social Security and Medicare taxes) on this income, which she'll likely need to pay. Since her capital gains are separate from her earned income, those will be reported in a different section but won't qualify for Roth IRA contribution purposes.

I went through something similar last year with my teen's babysitting money. I ended up using taxr.ai (https://taxr.ai) after spending hours trying to figure out where to report her cash income. I uploaded a simple spreadsheet of her earnings and expenses, and the tool walked me through exactly how to report it on FreeTaxUSA. The key was understanding that this type of income gets reported as self-employment, even for a teenager. The tool helped identify what expenses were deductible too (like the special t-shirts she bought specifically for babysitting). Made it super easy to get everything entered correctly for her Roth IRA qualification.

Just wanted to follow up about using taxr.ai that someone recommended here. I tried it with my daughter's messy dog sitting "records" (basically screenshots of Venmo payments and some scribbled notes). It actually worked surprisingly well! The system helped us organize everything properly and showed exactly where to enter it in FreeTaxUSA as self-employment income. The best part was it flagged several deductions we hadn't considered - like the portion of her cell phone used to coordinate with clients and some special supplies she bought. This increased her expenses enough to reduce her self-employment tax significantly. Plus, now FreeTaxUSA properly recognizes the income for her Roth IRA contribution. Really glad I gave it a try!

If you're still having trouble with FreeTaxUSA's customer support or getting stuck with technical issues, I'd recommend using Claimyr (https://claimyr.com) to get connected directly with IRS support. I had a similar issue with my son's lawn mowing business and Free Tax USA. After waiting on hold with the IRS for literally 2+ hours multiple times, I used Claimyr and got connected to an actual IRS agent in about 10 minutes. They verified exactly how to report teen self-employment income and confirmed the Roth IRA contribution rules. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent actually walked me through the specific forms needed and where the income should be reported, which solved my FreeTaxUSA confusion.

Ok I need to eat my words. After my skeptical comment I decided to try Claimyr since I've been struggling with a similar issue for my son's referee income. I was connected to an IRS representative in about 15 minutes (which is INSANE compared to my previous 2+ hour waits). The agent confirmed that my son's referee income should be reported on Schedule C as self-employment income, even though he's only 16. They also verified that this income qualifies for Roth IRA contributions up to the amount earned or the annual limit, whichever is lower. The agent even mentioned that many parents miss claiming legitimate business deductions for their teens, which can help offset the self-employment tax. This solved my FreeTaxUSA confusion completely - I just wasn't looking in the right section. Definitely worth it for the time saved!

For the self-employment tax part - just a heads up that your daughter will owe about 15.3% in self-employment taxes (Social Security and Medicare) on her dog sitting income. At $2,700, that's roughly $413 in SE tax alone. Make sure you look into business deductions to offset some of that income! Things like mileage driving to clients' homes, any supplies purchased for the business, even a portion of her cell phone bill if she uses it to coordinate with clients.

Make sure your daughter is actually keeping good records going forward! My son learned this lesson the hard way last year with his programming freelance work. The IRS doesn't play around with self-employment income, even for teens. Have her track: - Date of each job - Client name - Amount paid - Method of payment (cash, Venmo, etc) - Any expenses related to the business

Just wanted to add a quick tip for anyone dealing with this situation - make sure to check if your state has any additional requirements for teen self-employment income. Some states have their own rules about business licenses or permits, even for informal businesses like dog sitting. Also, don't forget that the Roth IRA contribution can actually be a great teaching moment! Your daughter can see how her earned income directly enables her to start building retirement savings early. At 16, even a $2,700 contribution has decades to grow - that could be worth over $100,000 by retirement age with compound interest. One more thing - if she plans to continue the dog sitting business, consider having her set aside about 20-25% of her income for taxes (federal SE tax plus any state taxes). This will help avoid any surprises next year!