Summertime Jobs, Teens, & Taxes
Summer is almost here, and with its end comes the end of school for most teens. Faced with three months of endless days, a lot of teens have started looking for a summer job. Here are a few tips and planning ideas to help save you time, money and taxes next filing season when your child’s W-2 comes in the mail:
For 2019, the standard deduction for a dependent child is total earned income plus $350, up to a maximum of $12,200. Thus, a child can earn up to $12,200 without paying income tax.
Do I claim their income?
Your teen is required to file his or her own taxes if the child is working or receiving income other than interest and dividends.
Teens Owing Taxes?
A good rule of thumb for your working child is to claim zero exemptions on their W-4 to ensure they have enough taxes withheld so they don’t owe money to the IRS come tax time.
Still a Dependent?
Your dependent child can have any amount of income and still be claimed as a dependent as long as they do not provide more than half their own support: gifts, entertainment, food, shelter, clothing, purchasing a vehicle, maintaining a vehicle, other forms of transportation and school expenses. If your child can be claimed as a dependent on your tax return, they cannot claim their own exemption.
Child Tax Credit?
Each dependent child under the age of 17 can qualify you for the $2,000 per child tax credit. The credit is available to you even if your child is working and paying taxes on their income, however it is dependent upon your income.