Teens & Taxes

Basics

Nobody likes to pay taxes and most teens don’t think they have to.  But if you work for a company and get paid you have to pay them.  Employers are required to deduct Federal taxes from all employees, even for minors.  In some states you may also have to pay state income tax, regardless of how much you make. The employer might even take out Social Security, Medicare, health benefits or retirement funds.  In some cases you could be entitled to part or all of the deductions back after you file your return.  It is a good idea when you’re working to become familiar with the basic rules and forms.

 

 

Teen Taxes 101

  • If in 2008 you earned over $9,350, you needed to file an income tax form.  If you made less, you didn’t.  Each year the amount changes, so be sure to check.  But even if you make less, you might still want to file a tax return because you could be due a refund.
  • In 2008, if you earned over $400 from babysitting and lawn mowing it was considered earned income.  If you’re self employed and earned more than $4,360, you have to pay self-employment taxes.  Each state might be different, so check your state.
  • If you make income from investments, capital gains (profit from the sale of an asset such as a stock) or interest, you need to file because it is considered “unearned income (income that is not a wage)."

Here is a list of some of the most common tax forms you will have to submit to the Internal Revenue Service (IRS), Federal Taxes.  You will also have to file with the equivalent tax service within your state.  If you earn money you should become familiar with them.  If you need to fill one out, check with your employer, parents or accountant.

  • W-4 form:  A form you need to fill out when you are employed so your employer knows your tax status.
  • Pay Check Stub:  Check your pay check stub to see what your employer is taking out of your pay check.
  • W-2 Form:  This is a form sent to the Internal Revenue Service (IRS) by your employer disclosing how much you made.  You also receive a copy of this form.
  • Schedule C This is a tax form that informs the Government about your self-employment work.

 

Internal Revenue Service (IRS)

The IRS is the Federal Agency charged with collecting Federal taxes.  This includes:  Income Taxes, Social Security Taxes and Gift Taxes.  Generally, your Income taxes must be postmarked (in the mail stamped by your local post office), no later than April 15th.  If that falls on a weekend, the date is pushed back to the following Monday.  You probably will also have to pay state taxes.

http://www.irs.gov/individuals/index.html