The Los Angeles Post

Money from that summer job may be subject to taxes

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Tax Tip 2023-76

June 5, 2023

 

School’s out, and teens and young adults may get summer jobs to earn extra money. This work may include babysitting, landscaping, dog walking, pool service and other activities where workers and customers exchange goods and services for money, including the gig economy. When someone’s an employee of a business, their employer withholds taxes from their paycheck. If they’re self-employed or an independent contractor, they’re responsible for paying taxes themselves.

 

Things to keep in mind:

 

  • Everyone must file a tax return if they had net earnings from self-employment of at least $400.
  • If they owe taxes, teens and young adults should file their own tax return even if their parent or guardian claims them as a dependent.
  • Teens and young adults can prepare and sign their own tax return. There’s no minimum age to sign a tax return.
  • Parents can’t claim a dependent’s self-employment income on their own tax return.
  • In addition to income tax, people who are self-employed are generally responsible for self-employment tax. This includes Social Security and Medicare taxes.
  • Taxpayers who receive more than $600 for goods and services sold through online marketplaces or payment apps could receive a Form 1099-K.
  • Teens and young adults can lower the amount of tax they owe by deducting certain expenses.

 

Keep accurate financial records – it’s good for business. Organized, accurate recordkeeping helps taxpayers track income and deductible expenses. This gives them easy access to the information they need to file a tax return.

 

Pay estimated tax if it’s required. If a teen or young adult is a dependent on another person’s tax return and they expect to owe at least $1,000 in tax for 2023, they must make estimated tax payments quarterly. To avoid a penalty, they should pay enough tax on time.

 

To figure and pay estimated tax, taxpayers should use one of these forms:

 

 

If a self-employed taxpayer has another job where their employer withholds tax, they can increase their tax withholding with their employer to cover the estimated tax they’ll owe on their self-employed income. This way, they won’t have to pay estimated self-employment tax. To figure out how much to withhold, wage earners can check the IRS Tax Withholding Estimator.

 

File a tax return. Taxpayers should gather and review their information, forms, records and any estimated taxes they already paid and e-file their tax return.

 

If they owe taxes, they can pay electronically with IRS Online Account and Direct Pay. For a full list of payment options, see Payments.

 

More information:

Small Business and Self-Employed Tax Center

Tax Withholding and Estimated Tax, Publication 505