Custom Search

Tax Tips for Teens

Whether they'll admit it or not, your teenage children need your help understanding how income taxes work. Send them off to the working world on the right foot by reviewing these taxpayer basics.

Most teenagers have mastered the art of selective hearing. They can hear their favorite song playing three blocks away, but turn deaf to your voice when you're standing in the same room. Here's a no-fail tip for capturing that your child's attention: Bring up the subject of income taxes just when she's opened her first paycheck and starts wondering where all the money went.

Tax Basics

Earning a paycheck can be a rewarding experience for your teen-unless she's caught off-guard by the tax withholdings. You can minimize potential disappointments by helping her understand her role as a U.S. taxpayer. Generally, all citizens and residents must pay taxes to fund local, state and federal governments. Employers assist in this effort by withholding money from wages to cover each employee's tax liability.

There are two main categories of taxable income: earned income and unearned income. The former includes salaries, wages, tips, professional fees, and some scholarships. The latter includes investment income and taxable interest, such as the kind earned in a savings account.

Important tax forms

When your teen reports to her first day on the job, her employer will request a completed W-4 Form. Employers use the number of withholding allowances claimed on the W-4 to determine how much money is withheld from the paycheck. Guidelines for choosing the number of allowances are provided with the form's instructions, but most teens claim either 0 or 1.

Your teen should also become familiar with the W-2, 1040, 1040 EZ, and Schedule C-EZ. The employer prepares a W-2 at the beginning of each year; it summarizes the prior year's wages and tax withholdings. This information is used on the annual tax return filing, which is submitted on the 1040 or 1040 EZ form. If your teen earns money from self-employment activities, like babysitting, her tax return may need to include a Schedule C-EZ, as well.

Filing requirements

Not everyone who has a job is required to file a tax return. Your teenager need only file if:

She earns $5,150 or more in wages.

She earns $400 or more from self-employment activities.

She earns more than $108.28 in wages from a church or other organization that's exempt from social security taxes.

She overpaid her taxes and wants a refund.

Unearned income and scholarship income can be taxed, as well. For more information about these and other special situations, see IRS Publication 929, Tax Rules for Children and Dependents.

As always, check with your tax advisor for the final verdict on your situation. And while you have your teen tuned in to your tax lecture, try dropping a few hints about keeping her room clean.

By:Catherine Brock

1 comments:

Free Softwers Download with Fullversion keys said...

Browse the list of beauty tips for teenagers for FREE to print, All these beauty tips are homemade and you should try these beauty tips for teenagers, so that you know the value & taste of the beauty. What are you waiting for, lets grab your favorite beauty tip and comeback for more beauty tips for Teenagers.
Thanks for share.
Beauty Tips For Teens

Custom Search

Enter your email address:

Delivered by FeedBurner

About Me

My photo
Welcome to my Blogs.I'm provide sufficient great articles information,tips low-cost,frequently asked questions and guide to buying.Health Insurance,Life Insurance,Home Mortgage Rate,Home Equity Loan,Home Refinance,HELOC and Home Equity Poor Credit.Nice to meet you.