Do They Need To File?

Growing up, you’ve probably heard adults complain about the process of filing taxes. Now, you may be receiving your first paychecks and noticing tax withholdings on them. So when do you have to start filing taxes yourself? 

The answer depends on factors like your income and dependency status. Read on to learn if you have to file taxes and if so, how.

Do Teens Need To File Taxes?

Unfortunately, there is no clear-cut answer for whether minors have to file taxes because tax requirements are not purely determined by age. Anyone receiving a paycheck—including minors—automatically pays taxes, but your dependency status and income determine whether or not you have to file a separate tax return from your family.

Dependency Status 

Minors who qualify as dependents on their parent or relative’s tax return do not have to file a separate tax return. In the eyes of the Internal Revenue Service (IRS), all dependents are classified as “qualifying children” or “qualifying relatives,” with the qualifying child label being most relevant for teens. 

Generally, qualifying children follow these criteria for the tax year:

• A child of the main tax filer
• Under age 19 and younger than the main tax filer or age 24 and younger but a full-time student  
• Living with the main tax filer for over half of the year
• Receiving over half of their total financial support that year from the main tax filer 
• Not filing a joint return

There are specific exceptions depending on factors such as marital status, citizenship, and student status, so it is best to consult the IRS website to make sure you understand your personal situation.

Income 

Even if you can be classified as a dependent, if your yearly income is too high, then you must file a separate tax return from your parent or guardian. Different kinds of income are taxed differently by the IRS, so income and income type are important factors when determining if you need to file your own taxes:

• Earned income includes salaries, wages, professional fees, and other pay received for specific work performed. It may also include scholarships. 
• Unearned income includes interest, dividends, trust distributions, and capital gains.
• Gross income is the amount of total income that a person gains or earned and unearned income before taxes or deductions. 

For tax year 2024, a teen should file a separate tax return from their parent if any of the following statements are true:

• Earned income was greater than $14,600
• Unearned income was greater than $1,300
• Gross income totaled greater than your earned income or $1,300 if you had unearned income 

The last statement is the most confusing, but basically, if you only have earned income, you can earn up to $14,600 before you must file taxes independently. However, if you have both earned and unearned income, you can only gain up to $1,300 before you must file taxes independently.

Filing Scenarios for Teens

This process can be difficult to navigate, so here are a few common scenarios for teens who are determining if they should file their own tax return: 

Part-Time Job

If you have a part-time job, you likely filled out a Form W-4 which determined how much federal tax your employer could withhold from your paychecks. At the end of the year, your employer will provide you with your Form W-2, which specifies your wages and withholdings. These forms, plus any additional income, can help you easily determine your dependency and income status.  

Self-Employment

The income limits for self-employed individuals are a bit different than for traditionally employed people. If you have gained more than $400 in self-employment income in a tax year, then you must file your own tax return. If you have earned less than $400 through self-employment, then it can be categorized under earned income and added to the remainder of your income types. 

If you were employed as an independent contractor, your employer should provide you with a Form 1099 which will spell out your yearly income from them. 

Combination of Income Types

If you have both earned and unearned income, your annual gross income cannot exceed the requirement for unearned income, $1,300.

For unearned income through investments, your brokerage firm will provide you with a Form 1099, which will show you your unearned income from those investments.

Special Considerations: The Kiddie Tax

If you have unearned income, you should be mindful of the kiddie tax. This rule was designed to prevent parents from using their children’s assets as a tax loophole to benefit from children’s generally lower tax rates.

If a child’s unearned income totals more than $2,600 for tax year 2024, then it may be subject to the kiddie tax, which is higher than the usual income tax on most children. However, if the child has only gained unearned income in a single year and their income totals less than $13,000, then a parent may be able to include that income on their tax return. 

Though similar, this process is not the same as claiming the child as a dependent. The designation has its own set of age, income, and tax return requirements, which can be found on tax form 8615.

Non-Taxable Income

Generally speaking, most income is taxable. But there are a few common types of nontaxable income that teens may want to consider:

• Gifts 
• Inheritance 
• Child support payments 
• Most insurance payments 
• Certain scholarships 
• Most health care benefits 

These incomes are not taxed, so they won’t require you to file unless you have other forms of taxable income.

Filing a Tax Return as a Teen

Filing taxes is an infamously complicated process, but here is a simplified list of next steps: 

1. Decide if you want to file: Depending on your dependency status, income, employment, and personal financial situation, determine if you want to file independently in the first place. 
2. Gather tax information: Gather necessary documentation, such as your W-2, Form 1099, and social security number. 
3. Choose a tax-filing software or preparer: Tax-filing software or a tax preparer can ease the process of filing taxes. The IRS has a list of tax-filing software to help, plus a new Direct File program that can be used by residents of 25 states. 
4. Complete the tax return: With the help of your tax-filing software or tax preparer, select your filing status, complete your income report, input tax credit information, and write in any bank information if necessary.

The Bottom Line

As a teen, you may or may not need to file your own tax return depending on your dependency status, type of income, age, or other important factors. Filing taxes as a teen can seem complicated, but learning about the process and requirements early can set you up for a lifetime of smart financial habits. If you’re ever unsure about your filing requirements, consider talking to your parents or a financial professional.