I’m recycling some of my previous summer-related stories this week. Here’s one from last July, in which I answer the question: “Is Child’s Lawnmowing Job Subject to Sales Tax?”.

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(Originally published July 21, 2011)

People who provide lawnmowing services in Iowa are required to collect state sales tax.  But what if the person mowing the lawn is a kid?  The answer is, “it depends.”

Technically, anyone — regardless of age — who mows lawns for compensation should be collecting sales tax from customers and remitting it to the state.  But in a refreshing breath of common sense for a state known for convoluted tax rules, Iowa does allow an exemption from this if:  1) the owner of the business is the only one performing services; 2) the owner is a full-time student; and 3) gross receipts for the year are less than $5,000.  So in most cases, if your kid mows lawns during the summer, they won’t have to worry about sales tax unless their business booms and their gross receipts exceed $5,000.

Something to remember is that this exemption only applies to sales tax.  Income from your kid’s lawnmowing endeavors is subject to income tax by both the state and the IRS, and may even be subject to self-employment tax by the IRS if the net earnings are above $400.

The state of Iowa has a handy sales tax publication for people of all ages who are in the lawncare business.  You can click here to read it.

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”