Do Teens Have to File Taxes? 🤔📑
Simple answer: It depends…
In general, when you’re under the age of 65 and single, the IRS (Internal Revenue Service) expects you to file taxes if you are earning more than the standard deduction amount that year (for reference, this was $12,950 for single filers in 2022). To make it easier, they also created this tool to help you answer this question — check it out here!
If you are earning less than the standard deduction amount and your employer is withholding money from your paycheck for “taxes,” there’s a chance you might be owed a refund. To get that tax refund, you’ll have to file your own tax return.
If you are filing as an independent, your parent(s) or guardian(s) should not report your earned income on their taxes. However, since they are still your parent(s) or guardian(s), under the IRS’s rules, you must indicate that they/someone else can claim you as a dependent on your return.
What if I have a side job over the summer — Do I still have to pay taxes?
Possibly yes… pay attention to how you’re classified by your employer!
Though smaller businesses like hiring additional help as contractors instead of as standard W-2 employees, if you’re earning more than $400 through these activities, you won’t owe federal income tax; however, per the IRS, you must still file a return, report your income, and pay self-employment taxes. You’ll likely receive your income report via the 1099 form.
But there’s also good news! If that’s the case, you’re able to make tax deductions for certain expenses related to your job. For example, if you’re using your own lawnmower to mow the grass or buying treats for the dogs you walk, you can write off those costs. If you’re driving yourself to and from work, you can also deduct that mileage.
There are also some special rules/cases regarding taxes for minors. If you are under the age of 18 & help out around the neighborhood by lawn mowing or babysitting, you are considered a household employee and are eligible for certain tax exemptions. The same applies if you are under the age of 18 and working for your sole proprietor family business (a business wholly owned by a member of your household) — however, this completely changes if you are getting paid more than the standard deduction for filing.
Have you ever heard of “The Kiddie Tax?” — Taxes on investment
The Kiddie Tax is a law that was passed with the goal of discouraging wealthy individuals from transferring their assets to their children and thereby taking advantage of the lower tax rates.
For dependent children (if you are a child and are not filing your own tax return/are included on your parent/guardian’s instead), it currently states:
The first $1,150 of unearned income (income from investments) is covered by the kiddie tax’s standard deduction, so it will not be taxed.
The next $1,150 of unearned income will be taxed at the child’s marginal tax rate.
All unearned income above $2,300 will be taxed at the parents’ marginal tax rate
Otherwise, if you are under 18 and making over $2,100 (will vary) in unearned income, you can also file your own return on those investments through Form 8615.