Tax for teens?

Question

Excuse me, but I recently got a steady source of income without my parents and do I need to pay tax? I get paid monthly by check. If I could get a detailed, helpful answer, I will award 10 points. Thank you very much for the help.

Answer 1

There is a limit below which you don't pay federal income tax.  It changes a little each year - this year the limit is $5450, assuming you are a dependent of your parents, or $8950 if you aren't.

Rules for state and local income tax, if any, vary by where you live.

You will pay social security and medicare, totalling 7.65%, on all your wages if you are an employee - it will be deducted from your paychecks, and your employer will pay a matching amount for you.  If you are not an employee but are an independent contractor, you'll pay both halves of the social security and medicare if you make over $400 for the year.

Answer 2

You may.  It depends on what your total income will be for the year.

Answer 3

This is a complicated question because it is lacking some very key details. You said you get paid monthly by check...is that source of income from a job, self-employment or some kind of financial fund, like a trust fund? The source of money is important to evaluate if you pay taxes or not.

If you make more than $434 in profit, and you are self-employed, you must file a 1040 form with a schedule C and a schedule SE.

If the money is from a trust fund or such, you may need to figure on capital gains tax...which could be lower or higher than normal taxes.

If your parents are still claiming you, make sure you do NOT put a '1' in the first part of your 1040 form to claim yourself.

The best way to avoid taxes at all is the find and claim as many deductions as possible. If this is income from self-employment, keep track of EVERY expense you have...from lunches on the job to gas money spent. Every expense allowed on the Schedule C...the more deductions, the less profit, the less likely you owe self-employment taxes.

Good luck but I will also leave you with this advice...don't try and sneak anything by the IRS. I work there and they don't kid around with tax cheaters.

Answer 4

It depends on how much you make and whether you are an employee or not.  As a dependent of your parents  you get a standard deduction that essentially allows you to make over $5K without paying taxes as an employee (paycheck that has taxes withheld, etc.)  But if you are self-employed or a contractor, as it sounds like you are since you are paid once a month by check (I assume that you mean you get paid everything you earned - no taxes withheld - making you a contractor), you have to file a return if you made $400 or more.  So give us more to go on if you want an answer.  You need to be "detailed" and "helpful" too!