Does My Teenager Have to File a Tax Return?
Does your teenager have a part-time job? Or is she earning interest and dividends from investments you made for her as a child? Find out when teenagers need to file a tax return and how to file a tax return for a teenager.
2011 Income Requirements for Teenagers:
For the 2011 tax year, which is filed in 2012, teenagers claimed as a dependent on your return must file their own taxes if they meet any of the following conditions:
- Earned income is greater than $5,800. This includes the money your teen earns at a part-time job.
- Unearned income is greater than $950. This includes the dividends and interest on savings accounts or investments.
- Self-employment net earnings are greater than $400.
- Earned and unearned total income is greater than the larger of $950 or earned income plus $300.
How to File a Tax Return for a Teenager:
There are two ways your teen can file a tax return depending on how she earned money during the year.
- Attach to parent's return if teen doesn't have a job. If your teenager is under age 19 (or a full-time student under 24), and the teen's income is less than $9,500 and only from interest and dividends, it can be attached to the parent's return using Form 8814. If there is any income from a part-time job, you cannot attach your teen's tax return to your tax return. While this method is an easy way to file the tax return, it can however, result in higher taxes on qualified dividends or capital gains.
- Complete individual teen tax return. If the requirements are not met to attach it to the parent's return, or you want to ensure lower taxes, the teen should file her own return. Your teen can file a simple return for free at CompleteTax.
Kiddie Tax for Teens:
It's important to know that if interest plus dividends plus other investment income total more than $1,900, part of your teen's income will be taxed at the parent's tax rate instead of the teen tax rate.
This is referred to as the kiddie tax, which exists to make sure that the government is not losing tax revenue when parents shift income to their children.
Teaching Teens About Taxes:
When you are working on filing taxes for your teenager, it's a great opportunity to teach her about taxes. If she has a job, explain to her that her employer will withhold taxes from her paycheck and give her a folder to save her paycheck stubs for tax time. In addition, have her help with the tax filing, by gathering her paychecks and adding up how much withholding she had. Show her where you enter the numbers on the tax forms to introduce your teen to taxes.
Other Filing Requirements for Teens:
In addition to the income tax filing requirements, there are other circumstances when teens must file a tax return. One example is tax on Social Security and Medicare uncollected by an employer. For all the requirements, see Publication 929, Tax Rules for Children and Dependents.
Optional Teen Tax Filing:
Even if your teen is not required to file a tax return, she can choose to file one. She may want to do this if she had withheld from a part-time job and wants to get a refund.
Once you determine that your teenagers will need to file a tax return, you can use CompleteTax to file a free teen tax return.