Filing taxes can be a daunting process for anyone, especially teenagers who may have just started earning money from their part-time jobs. Many teenagers may wonder whether they are required to file taxes and how to go about doing it if so. In this guide, we will answer the question “Can 16-year-olds file taxes?” and provide a comprehensive overview of tax filing for teenagers.
Understanding Taxation Laws for Teenagers
Before delving into whether 16-year-olds can file taxes, it’s essential first to understand the taxation laws in the United States that apply to young earners. Any individual – regardless of age – is required by law to report their income earned throughout the year through various sources such as wages or salaries, tips, freelance work or self-employment earnings if they exceed specific thresholds set by the Internal Revenue Service (IRS).
For example, let’s consider a 16-year-old named Alex who works part-time at a local grocery store. In 2023, Alex earned $13,000 from his job. Since his earnings exceeded the $12,550 threshold, Alex is required to file an income tax return.
For individuals under the age of 18 (or whatever age your state defines as a minor), any income above $1,100 must be reported on an income tax return. From a federal perspective, teenagers that earn more than $12,550 in earned income plus another $1,100 in unearned income must also file an income tax return.
It’s essential to note that not all types of incomes are treated equally when determining whether you need to file a tax return. Wages or salaries earned from employers typically fall into what’s known as “earned” income – but interests and dividends generated from savings accounts or inheritance generally categorize as “unearned” revenue.
- Individuals under 18 earning more than $1,100 in total annual taxable gross revenue must report their earnings on an IRS filing form.
- Individuals with “unearned” revenues exceeding $2K or “earnings” over ~$12K required by federal tax laws.
How to File Taxes as a 16-Year-Old
Now that we know the minimum threshold for filing taxes, let’s go over how exactly teenagers can file their taxes if required.
Gather Income Information
Before starting your tax return, you need to collect all your income-related documents such as W2 forms or 1099-MISC. Make sure you receive and keep copies of these documents from employers throughout the year. For instance, if you worked a summer job and then a different part-time job during the school year, you should have W2 forms from both employers.
Choose Your Filing Status
Your filing status depends on whether you are claimed as a dependent by another taxpayer (such as parents) or earn enough money not to be considered a dependent. Choosing an accurate filing status is crucial in determining which deductions and credits apply to your circumstances. For example, if your parents still provide more than half of your support, they may claim you as a dependent, which could limit your ability to claim certain tax credits.
Complete the Appropriate Tax Form
The most common form teens filed are either Form 1040EZ or standard Form 1040. If using tax-preparation software like TurboTax, it will automatically fill out these forms per your answers. It’s important to answer all questions accurately and honestly to avoid potential issues with the IRS.
Submit Your Return Electronically
Once completed, taxpayers must fully file electronically – this may require a fee — unless qualified under certain limited exceptions. E-filing increases the accuracy and processing speed considerably while also ensuring safety against mail theft. Plus, you’ll typically receive your tax refund faster if you choose direct deposit.
Common Mistakes Made When Filing Taxes for Teenagers
Besides understanding whether they should report earnings in their tax returns, teens new to income earning may make some common errors when filing their taxes:
- Not reporting all earned income: It is critical to report all earned income received during that fiscal year accurately. For example, if you did some freelance work on the side in addition to your regular job, you need to report that income as well.
- Wrongly claiming multiple exemptions: young taxpayers who depend on their parents’ care (i.e., food/lodging/support/etc.) cannot claim full independence. This is a common mistake made by teenagers who may not fully understand tax laws.
- Not double-checking before submitting filings: Always verify everything before e-filing. A simple mistake like entering the wrong social security number or misspelling your name can lead to delays in processing your return.
In summary, just because someone is still attending high school doesn’t mean they’re exempt from taxation laws! All taxable U.S. individuals, regardless of age, must report their income when it exceeds the minimum threshold defined by law. Teenagers earning money from part-time jobs should file a tax return if they earn above $1,100 and $12,550 in unearned and earned revenue respectively. Finally, filing returns correctly and carefully can help you avoid common mistakes made by young earners when filing taxes.
Q1. Do 16-year-olds need to file taxes?
A: Whether or not a 16-year-old needs to file taxes depends on their income level. If they earn more than the standard deduction amount for their age and filing status (which is $12,400 in 2020 for single filers), then they will need to file taxes. However, if their income is below that threshold, they do not have to file a tax return.
Q2. What types of income should a 16-year-old report on their tax return?
A: A teenager who earns money from a part-time job or freelancing work must report it as earned income on their tax return. They should also report any taxable investment income received, such as interest and dividends from bank accounts and stocks.
Q3. Can parents still claim their child as a dependent even if the teenager files taxes?
A: Yes, parents can still claim their child as a dependent on their own tax return even if the teenager files taxes separately. Being claimed as a dependent may affect the teenager’s eligibility for certain deductions and credits though; therefore families should consult with an accountant or tax professional before making any decisions related to claiming dependents on individual returns.