Tax season is upon us once again, and for teenagers who are earning income for the first time, it can be a confusing and overwhelming time. If you’re 17 or younger, do you need to file taxes? Below are some guidelines to help you determine whether or not you need to file.
What kind of income do you have?
The first step in determining whether or not you need to file taxes is identifying what kind of income you have. The IRS (Internal Revenue Service) defines earned income as money earned from working, while unearned income refers to investments and other forms of passive income.
- If your only source of earned income was from wages that totaled less than $12,000 in the year 2021 – then typically no.
- However if your earnings were above this threshold- regardless on whether they were part-time or full-time work- then probably yes.
If your unearned interest gains over the year amount up more than $1,100 annually- then usually yes.
Are You Claimed as a Dependent?
If someone claimed on their tax return(such as parents)- that they provided financial support for more than half of your expenses during the year , then You may also need file even if its below earnings threshold limit
Remember though Even if it isn’t necessary under these guidelines sometimes there could be benefit from filing anyway . For example:
- Refund on withheld taxes
- Establishing a history with IRS
- Can Help qualify with FAFSA applications
Bottom Line: It’s important to understand that every individuals’ tax situation can vary significantly based on individual factors such as sources and amounts of incomes etc therefore As we’re not qualified legal consultant please make sure speak at certified professional about filing obligations unique situations
Here are 3 popular FAQs with answers related to “Tax Time at 17: Do You Need to File? Find Out Now!”:
Question: I’m 17 years old, do I need to file taxes?
Answer: If you earned income during the tax year, which includes wages, salaries, tips, or taxable scholarship and fellowship grants that exceed a certain limit ($12,400 for tax year 2020), then you must file a federal income tax return regardless of your age.
Question: I didn’t work but received interest on my bank account. Do I need to file taxes?
Answer: It depends on how much interest you earned. For the tax year 2020, if your interest earnings were more than $1,100 as a single filer or more than $2,200 if you’re married filing jointly then it’s likely that you’ll have to file a federal income tax return even if you had no earned income.
Question: What happens if I don’t file my taxes when required?
Answer: If you fail to file your taxes when required by law and owe money on those returns there will be penalties assessed by the IRS in addition to any outstanding amounts owed. These penalties can include late fees and interest charges that could add up significantly over time so it is best practice not to overlook such obligations and meeting them before their deadlines.