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Teen workers and potential tax breaks

For many teens, their summer vacation is nearing an end. With school starting in the next few weeks, many will be leaving their summer jobs. But for those teens who worked over the summer, it is important to know about the tax implications that may affect their income (or their parents’ tax liability) come tax time next year.

First and foremost, a teen worker who is a dependent on their parent’s tax return may not be required to file a tax return as long as he or she does not make more than the standard deduction amount for a single filer.  For the 2016 tax year, the standard deduction will be $6,300. As such, a teen can make this much money without filing a return.

For those teens providing traditional services, such as lawn mowing and babysitting, they will be considered by the IRS as household employees, even if they have formed their own businesses. As long as they are under the age of 18 during any part of the tax year for which they earned income, their earnings may not be subject Social Security or Medicare taxes.

Finally, teens who work within the family business, whether it is a restaurant, real estate company or even a plumbing service, may not have to worry about withholding for taxes. This may especially be the case if the parents’ business is unincorporated, (i.e. a sole proprietorship or partnership). Again, if the teen worker is under the age 18, there may be no taxes owed at all. 

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Law Offices of Robert T. Leonard, APC

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