Taxes for Teens – A Beginner’s Guide

A parent teaches her teen how to file using TaxSlayer

Your teen has entered the workforce and is receiving a paycheck. Now is a great time to start talking about taxes. Teaching your kids about taxes helps take the fear and stress out of tax filing. By giving them the basic info they need, you are empowering them to be the master of their own money. Here is some simple but essential tax filing knowledge you can share with your teen.

Net income vs. gross income

Let’s say you started working at a clothing store for $9.00/hour. You worked 27 hours this pay period, so you might be expecting to get a paycheck for $243. Instead, your take-home pay is closer to $200. Why is that?  

Every person who earns money working in the U.S. is supposed to pay federal income tax – and now that you’re employed, this includes you. You’re also required to contribute to Social Security and FICA. Most states governments charge a state income tax, too.   

Since the government expects you to pay taxes, they make it easy for you – that is, they take it directly out of your wages. As a result, the amount of money you take home will not be equal to the amount you earned

Your gross income is the amount of salary or wages your employer paid you before any tax was taken. So, the $243 you earned for 27 hours of work is your gross income. But your net income is what you take home after you have paid income tax, Social Security, and FICA.  

Tax filing status

Unless you are married, the filing status on your first tax return should be single. The IRS cares about your filing status because it helps them understand which income tax bracket to put you in (we discuss tax brackets next). Single people, married couples, people with dependents, and widow(er)s are put in different tax brackets, based on their filing status.   

Income tax brackets

How do you know how much you owe for taxes? There’s some math involved. The amount of tax you pay is a percent of your total taxable income for the year. This is called your tax rate

The government decides how much tax you owe by dividing your taxable income into chunks — also known as tax brackets. Each chunk gets taxed at a different rate. For example, here is a look at the tax brackets for 2019:  

Taxable income by filing status

RateSingleMarried (filing jointly)Married filing separately
10%$0 – $9,700$0 – $19,400$0 – $9,700
12%$9,701 – $39,475$19,401 – $78,950$9,701 – $39,475

22%$39,476 – $84,200$78,951 – $168,400$39,476 – $84,200
24%$84,201 – $160,725$168,401 – $321,450$84,201 – $160,725
32%$160,726 – $204,100$321,451 – $408,200$160,726 – $204,100
35%$204,101 – $510,300$408,201 – $612,350$204,101 – $306,175
37%$510,301 and up$612,351 and up$306,176 and up

As you can see, the rate you pay on your chunks depends on what your filing status is. 

Fun fact: The U.S. has a “progressive” tax system. What that means is, people with higher taxable incomes pay higher federal income tax rates, and people with lower taxable incomes pay lower federal income tax rates. If a person’s highest taxable rate is 35%, then we say they are in the 35% tax bracket. If the highest tax rate you will pay is 10%, you are in the 10% tax bracket.   

Who is required to file a tax return? 

Not everyone has to file taxes. For example, if your filing status is single and you earn less than $12,200 in the year, you don’t have to file your own return. Instead, your parent (or legal guardian) can claim your income on their tax return.  

If you earn more than $12,200, the IRS requires you to file your own personal tax return.  

Why should teens file their own taxes? 

If your employer withheld money from your paycheck for taxes (and they probably did), you might be owed a refund. But, you can’t get your refund if you don’t file a tax return.  

The info you enter on your tax return will be used to calculate whether your employer withheld too much, too little, or just enough from your paycheck to cover the taxes you owe. If too much was withheld, you will receive a refund. 

“Do I have to pay taxes for a side job like babysitting, lawn mowing, etc.?” 

Probably not. If you’re a teen earning extra money by mowing lawns or babysitting or something similar, it’s unlikely that you are earning enough money to have to pay income tax. You would only need to report your income if you have turned it into a business. Certain jobs, like babysitting, are considered “household employment” by the IRS, so even if you were making gobs of money, you would be exempt from self-employment tax. 

What you need to file a simple tax return 

  • Your W-2. Your employer should send your IRS Form W-2 Wage and Tax Statement in the mail or by email in January. Learn more about your first W-2. 
  • Your legal name.  
  • Your tax ID number. This will most likely be your Social Security number (SSN). If you don’t know your number, you can find it on your Social Security card. If you don’t have a SSN you will need an ITIN. The IRS uses this to make sure you are who you say you are. 
  • A TaxSlayer accountYou’ll need your own username and password, even if you are a minor. It’s free to create an account

Free tax filing for teens 

Let’s say you are single (not married), and the only tax form you have is a W-2. If this sounds like you, then you should qualify for Simply Free tax filing. 

When you file with TaxSlayer, you’ll be asked easy questions about your income. You can find the answers on your W-2. The info you provide will be entered into your IRS Form 1040 (your federal tax return). If your state collects income tax, you will fill out a separate state return as well, still using the information found on your W-2. 

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