Tax Day has now come and gone. Once again, NONE of my working teens filed their taxes because I told them not to bother. With the standard deduction for single dependents nearing $1,300, I told my kids to save the time and sit this filing year out.
Since each has started working, I have given this same advice. And, honestly, I’ve never been 100% sure that I/they are doing the right thing.
From my point of view, if my kids ultimately have $0 of tax viability (we live in Florida, so no state income tax, either) then filing to get the $20 lost does not make much sense.
Whenever I encourage my kids to take the easy way out, I feel like I’ve short-changed a learning opportunity.
But have I?
Learn from the “act” of filing taxes
My father’s rule was simple: once you made $1, you filed taxes. I remember loving the time my dad spent sitting me down with the manual 1040EZ form we’d picked up from the Cedar Rapids, Iowa Public Library. I’d dutifully dice up my $500 annual earnings W2-box-by-W2-box. And, in the end, I’d get back the money I’d paid in on. It felt like a surprise bonus.
That nostalgia had me itching to teach the same lessons to my working teens. That is until they told me filing taxes can be as simple as a few simple clicks on their phone.
Nostalgic feeling – gone.
Yeah, the efficiency of the internet has yielded the “act” of insisting your kids file taxes, well, meaningless and devoid of the father/kid interaction I am after.
More importantly, though, than my desire to spend more time with my teens, I began to wonder about their legal obligations for filing with the government by Tax Day.
Do teens have to file taxes?
I was relieved to learn it is fine NOT to file a tax return if a teen’s earnings do not exceed the standard, single deduction for a dependent. In tax year 2023 (returns that are due in April 2024), that amount is around $1,300.
So, no, a teen not filing taxes is, as they’d say, “not that deep.”
While your teen may not be required to file taxes, they can without any downside. The only possible outcome of filing at lower incomes (like those of my teens) is the opportunity to, potentially, get a refund. This would occur if they paid federal taxes in excess of their liability. These amounts are typically small and should be weighed against the time (and possible software fees) it might take to file.
I do like the idea of enforcing the discipline of filing taxes for teens. I regret I did not have them each go through the process. It would have opened them up to conversations that may be important down the road, such as concepts like “dependents,” “standard deductions,” and “tax credits.” Through these types of chats, it may become clear how meaningful it may be to a family’s taxes to claim teens as dependents until they age out. (As of 2024, a teen can be claimed as a dependent until age 19 or 24 if a full-time student).
Filing taxes is also an opportunity to explain the importance of filing status on tax liability – and not only for them! I’ll leave those lessons until next year, I guess.
What if my teen has only been paid in cash?
My 14-year-old daughter was only paid in cash for babysitting in 2023. It was only a small amount of money made babysitting for a select few friends. She assumed, then, that taxes did not pertain to her. To me, it was also a no-brainer to avoid filing a tax return.
Upon further review, I may have messed up.
The IRS guidance mentions $400 cash income as the line where a teen can be characterized as “self-employed” and, therefore, subject to paying taxes. Take note: the “self-employed” designation does allow for write-offs that would reduce or eliminate their tax liability.
So, while she could have filed, given the amounts, I’m OK with her skipping out with her brothers.
I feel better now. We haven’t skirted the taxing authorities. My kids would say they’ve saved time and that’s a win. I would contend we delayed a lesson they will need and should understand.
We’ll all have to pick up that lesson next Tax Day.
Teens and taxes photo by Nataliya Vaitkevich via Pexels.
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