If your teen just received a W-2 from their first part-time job they could be facing another first this year: filing taxes. Depending on your teen’s age, as a parent you might take an active role in the process, guiding them through the steps of filing.
First, it’s important to determine if they need to file taxes or not. There are several scenarios in which they might have to file taxes.
Your Teen Made More than $12,950
If your teen earned $12,950 or more at their part-time job last year, they need to file taxes in 2023 for tax year 2022. Most teens working only 20 hours a week through the year — or full-time in the summer with reduced hours during the school year — will not meet that threshold if they earned even as much as $15 an hour.
If you live in a state with high minimum wage or your teen snagged a well-paying summer job, make sure to look at the gross income on their W-2 form to determine if they need to file taxes. If that number exceeds $12,950, they will.
Your Teen Earned Cash Tips
If your teen worked in a restaurant, hotel, or other hospitality venues, they may have received tips as part of their income. IRS law requires employees to file a record of tips with their employer, so the employer can pay the appropriate Social Security and Medicare taxes on that money.
Your teen should report any earnings of $400 or more on their tax returns so they can pay their share of the taxes by April 15, according to the IRS website.
Your Teen’s Employer Took Out Withholding Taxes
Even if your teen did not earn $12,950 throughout the year, they may want to file a tax return if their withholding taxes were overpaid. If they can get some money back, it’s worth it to file, especially if they use a free e-file service.
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Your Teen Received Investment Income in Addition to a Paycheck
If your teen received interest or dividends from stocks, savings accounts or other investments and worked a part-time job, they might have to file a tax return. If the gross income from investments is more than $1,150, they must file a return — even if that amount does not meet the standard deduction amount of $12,950.
If you aren’t sure if your teen should file based on this information, consult with your family’s tax preparer or another tax professional.