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Teen jobs and tax issues

A teen’s tax return processing requirements rely upon his / her position as a reliant as well as on the total amount and kind of their income. Even if a teen isn’t required to document their own tax return, it may be good for do so. A discussion about taxes can be a great stepping stone to your teen’s broader financial education.

Teen Jobs and Tax Issues 

Next, you need to check out her income, both the amount and type.  Here’s where it gets more complicated because there will vary guidelines and income limitations for won income from employment, unearned income from dividends, interest or investment gains–or a mixture of both

For Earned Income Only

This is fairly straightforward. A dependent who does not have unearned income only must file a separate tax go back if gained income is above the standard deduction–$6,300 for 2015. So if your child earned significantly less than that, she wouldn’t have to document.

But it could be a good idea to do it anyhow. If her workplace withheld federal income tax, she might be eligible for a refund. You don’t want her to lose out on that. Plus, from the good learning experience.

For Unearned Income Only

Unearned income is some other story. If a child has unearned income above $1,050 for 2015, a tax return is required. But when interacting with unearned income only, you can pick to either record a separate come back for your son or daughter or include that income on your own go back. One caveat: If you include it on your return, it could enhance you into an increased tax bracket–and possibly higher tax rates.

For A Blend of Both

The rules change again if the dependent has both gained and unearned income.

In cases like this, you need to file a separate return if:

  • Unearned income is more than $1,050.
  • Received income is more than $6,300.
  • Put together income totals more than the bigger of $1,050 or attained income (up to $5,950) plus $350.

To create this a little clearer, suppose your daughter possessed $100 in interest income plus $5,000 in attained income.

A Phrase on the “Kiddie Taxes”

You might have heard of the Kiddie Tax, therefore i think that’s also worthy of a mention. This has regarding tax return rates on unearned income.

For 2015, your child’s unearned income significantly less than $1,050 is not taxed.  Unearned income between $1,050 and $2,100 is taxed at his / her rate. Unearned income above $2,100 is taxed at the parent’s highest income tax rate. If your son or daughter has a whole lot of unearned income, that could be pretty significant.

Heading Beyond Taxes

Whether or not your daughter documents a tax return, I’d definitely speak to her about taxes and withholding, and also have her work with you as you put together either hers or your own go back. Then take it beyond taxes and speak about sensible money management. Now that your child is getting her own money, help her create a budget so she can make the almost all of it.

Lastly, building good money habits early is extremely important but, in general, kids don’t learn much about handling money in college. It’s up to you. So show her the method that you manage for both short- and long-term. Invest the it step-by-step, and include her where appropriate within your own money strategies, you’ll placed her in relation to having the ability to not only handle her tax refunds, but her financial future, as well. For more info: http://www.taxreturn247.com.au