What teen entrepreneurs should know about taxes

Teens and young adults often go into business for themselves over the summer or after school. This work can include babysitting, lawn mowing, dog walking, or other part-time or temporary work. When teens or young adults are employees of a business, their employer withholds taxes from their paycheck. However, when classifed as independent contractors or self-employed, they're responsible for paying taxes themselves.

Here are six things to keep in mind: Everyone, including minors, must fle a tax return if they had net earnings from self-employment of at least $400.

If they owe taxes, teens and young adults should fle their own tax returns, even if their parent or guardian claims them as a dependent.

Teens and young adults can prepare and sign their own tax returns. There is no minimum age to sign a tax return.

Parents can't claim a dependent's earned income on their own tax return.

In addition to paying income tax, self-employed people are generally responsible for self-employment tax as well. This is the Social Security and Medicare taxes withheld from the pay of most wage earners plus the portion of these taxes the employer pays.

Teens and young adults can lower the amount of tax they owe by deducting certain expenses.

Estimated Tax Due Dates

For estimated tax purposes, the year is divided into four payment periods, each with a specifc payment due date. For the 2023 tax year, these dates are April 18, June 15, Sept. 15, and Jan. 16, 2024.

Call us to make an appointment to discuss your specifc taxes: (714) 848-9158. You also can read about various tax topics on our website: aaccettacpa.com