Is your teenager planning on working this summer? Below are a few guidelines about teens and taxes that might be helpful so you can give your child good advice on how to handle their summer earnings wisely:
If your teen works part-time, fills out a W-4, and makes less than $12,950 in 2022, they generally won’t be required to file a return.
However, if your teen earns over $12,950 in 2022, they will need to file a return—independent of your own. Remember, filing a return for your teen does not hinder you from claiming them as a dependent on your return.
If your teen works as an independent contractor, they will receive Form 1099 at the end of the year, but only if they made more than $600. While they may not owe federal income tax (if they made less than $12,950), they will need to pay self-employment tax on their earnings.
If your teen starts their own business (lawn care, for example), they are self-employed and will need to pay self-employment tax on earnings more than $600.
If you hire your teen to work for your family business or your teen works as a “household employee” and was paid cash wages of $2,300 or more in 2021, there are special tax considerations to look into.
Bottom line: Make sure your teen knows that they may owe federal taxes for those summer and household jobs. If your teen owns their own business or works as an independent contractor, you’ll need to keep an eye on their earnings and revisit the topic at tax time too. If you have questions, shoot us a quick email with your teen’s job information, and we’ll do what we can to help.
Please keep in mind the info above is for informational purposes only and is not intended to provide tax, legal, or accounting advice—every situation is different.
The Gasaway Team
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Kalamazoo, MI 49009 (269) 324-0080 FAX (269) 324-3834
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