Do Minors Get Taxes Taken Out of Their Paycheck?
Getting a job as a teenager can be an exciting experience and one that can help young people learn responsibility. Teenagers that work are often surprised to learn that they’re responsible for their own taxes, even if their parents still claim them as a dependent. In some scenarios, a parent may be able to include their dependent’s earnings on their own taxes, while in other situations a teen may need to file their own taxes. As to if minors get taxes taken out of their paycheck – generally yes, employers will withhold taxes if you are an employee.
Minors and Taxes
Money that you earn, regardless of your age, is taxable. Even as a minor, the standard tax brackets apply. As such, at the end of the year, you’ll compare what your employer has withheld from your paycheck to the tax liability that you owe to determine if you need to pay additional tax or if you’re due a refund.
How do you know if you need to file a tax return as a minor? It has to do with your level of income, and the type of deduction that you take at tax time. Teenagers are likely single dependents (if they’re unmarried minors) and as such would likely claim the standard deduction, as while they could itemize a return it’s not likely that they’d incur significant deductions in their life to itemize.
In 2021, the standard deduction for single dependents is the greater of $1,100 or the dependent’s earned income plus $350 but not to exceed $12,550. In 2022 those numbers increase so that a standard deduction for a single dependent is the greater of $1,150 or the dependent’s earned income plus $400 but not to exceed $12,950. So as long as the minor that is working made less than $12,550 (in 2021) or $12,950 (in 2022) their deduction would reduce their taxable income to zero and they would not have a tax liability.
While your teen may not have a tax liability, if they have a job where they’ve filled out a W-4, they’re probably having tax withheld from their paycheck. To get that refund money back, the teen will need to file their tax return at tax time.
Unearned Income and Minors
Minors may also have unearned income, which may come from interest or dividends. The amount of unearned income that a minor would need to file a return is $1,100 in 2021 and $1,150 in 2022. If a minor child has enough unearned income to file a return, a parent or guardian may claim that income on their own return for the minor – this is something that you’ll want to discuss with your tax professional as there are restrictions and tax implications that come with this option. Form 8814 may be filed with your 1040 to accomplish this method.
What if my teenager is paid under the table?
If your minor dependent is paid “under the table” they are technically self-employed. Any job that they perform where they’re receiving income and did not file a W-4, such as babysitting, lawn mowing, etc. is considered self-employment in the eyes of the IRS and your minor is responsible for recording this income and paying not only income tax but self-employment tax on this income. Since you’re self-employed, you are then responsible for the Social Security and Medicare taxes that an employer withholds. Self-employment tax applies when you have a self-employment income of over $400 per year.
Tax time can be complicated for anyone, and for a teenager navigating taxes for the first time it can feel particularly overwhelming. Tax professionals can provide advice not only during tax season but throughout the year to ensure that you’re prepared when it comes time to file your taxes.
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