How Much Can a Minor Make Before Paying Taxes?
Understanding the tax obligations of minors is crucial for both parents and guardians as well as the young individuals themselves. One common question that often arises is: how much can a minor make before paying taxes? This article aims to provide a comprehensive overview of the tax rules and regulations that apply to minors in the United States.
Minimum Age for Taxable Income
In the United States, a minor is considered to be any individual under the age of 18. However, the tax rules for minors are not the same as those for adults. According to the Internal Revenue Service (IRS), a minor is required to pay taxes on their income if it exceeds a certain threshold.
Standard Deduction for Minors
For the tax year 2021, the standard deduction for minors is $1,400. This means that if a minor’s income is below this amount, they are generally not required to file a tax return or pay taxes. However, if a minor’s income exceeds the standard deduction, they may be subject to taxes.
Unemployment Benefits
Minors who receive unemployment benefits may need to pay taxes on the amount they receive. According to the IRS, unemployment benefits are taxable income for individuals of all ages, including minors. Therefore, if a minor receives unemployment benefits exceeding the standard deduction, they may need to file a tax return and pay taxes on the excess amount.
Part-Time Work and Self-Employment
Minors who work part-time or are self-employed may also need to pay taxes on their income. The IRS does not have a specific age limit for minors to work, but employers must comply with child labor laws. For example, a minor working in a non-agricultural job must be at least 14 years old, while a minor working in an agricultural job must be at least 12 years old.
Reporting Income to the IRS
If a minor’s income exceeds the standard deduction, they are required to report it to the IRS. This can be done by filing a tax return, such as Form 1040. The minor can file the return themselves or have a parent or guardian file it on their behalf.
Withholding Tax
Employers are required to withhold taxes from a minor’s wages, just as they would for an adult. The amount withheld depends on the minor’s income and filing status. If the minor’s income is below the threshold for tax liability, the employer may not withhold taxes.
Conclusion
Understanding how much a minor can make before paying taxes is essential for both parents, guardians, and the minors themselves. By being aware of the tax rules and regulations, minors can ensure they are compliant with the IRS and avoid potential penalties or interest on unpaid taxes. Always consult with a tax professional or the IRS for the most up-to-date information and guidance regarding minors’ tax obligations.
