Once your teenager accepts paid employment outside of the home for the first time, it will be a new and exciting experience for both of you. Your teen will learn more about budgeting and money management, and you may not have to pay for all of his or her activities and personal belongings.
When tax time rolls around, your teen may also have to file a tax return for the first time. To decide whether or not your teenager is required to file a return, consider these three key factors.
Whether Your Child Is a Dependent
The Internal Revenue Service defines a dependent as someone who lives at home at least 50 percent of the time and does not provide at least 50 percent of his or her needed income. Teens under the age of 19 qualify as a dependent along with those who are 19 and currently attending school at least part-time. If your teen is a dependent, deciding whether they need to file a separate tax return will depend on the amount and type of income he or she earns.
The Amount of Income Your Child Earns
In 2017, the federal tax standard deduction was raised to $6,350. If your teen earned less than that during the year, there is no need to file a separate federal tax return. However, if your teen’s employer deducted federal taxes, filing a return could allow your teen to get a refund of what he or she already paid.
The Type of Income Your Teen Earns
Under current regulations, your teen must file a federal tax return if they have unearned income of more than $1,050. Unearned income refers to income from investments rather than from work and may include things such as interest income or inheritances. Teens with a combination of unearned and earned income must file a tax return if the combined income is more than the larger amount of $1,050 or earned income plus $350.
If your teen has a more complicated tax situation related to owning his or her own business or employing other teens, assistance from a tax professional may be helpful. VTax tax professionals are licensed and credentialed, and able to assist with even complicated tax situations. Learn more about VTax and find out how we can help you your maximum refund, guaranteed!