It might be easy to think that due to age, a teen would not need to file income taxes.  Instead, the basis is on the amount of income they received whether it’s for babysitting or mowing lawns.  Filing taxes also gives an opportunity to claim a refund of taxes that were withheld in their paycheck, as well as any tax credits which they are eligible for.

The Basic Filing Threshold

Before panicking over the IRS rules about filing, check to see that you are even required to report your income at all.  Keep in mind that if your income was from self-employment, you will need to file and be prepared to pay appropriate income taxes.  If you worked for an employer who did withhold taxes from your paycheck, then consider filing anyway as you may be owed a tax refund.

For current thresholds or additional information, see the website: irs.gov and search for current “Tax Rules for Children and Dependents”.

If a teen is certain their wages will fall below these thresholds in a given year, they have the option when filling out a W-4 to write “EXEMPT” on line 7 if they had no federal tax liability the year before and don’t expect any this year.  Likewise, the same can be done on the state W-4 form.  This will avoid having taxes withheld from their paycheck and having to file an unnecessary tax return.

Important Facts You Should Know

• Filing a tax return should only be done when all W-2’s have been received from each employer.
• Two pieces of information are required on every income tax form: the taxpayer’s name and tax identification number (Social Security number). The IRS wants these two items to match the data it has on file, and problems will arise if there is a discrepancy. Be sure to avoid using nicknames on tax returns.
• Seek to understand the filing status options – such as single, married filing jointly or head of household.  A common misunderstanding is attempting to use Head of Household status without having a qualifying dependent living in your home.
• All miscellaneous income will need to be reported whether you received a Form 1099 (which states you worked as an independent contractor) or not.  This allows you to legally claim all expenses that were incurred while earning that income. (Schedule C)
• Make special note that individual income tax returns are due by April 15, but there is no penalty for filing earlier, and doing so generally is a good habit.  You certainly want to avoid waiting until the last minute and rushing through the process as a mistake in just one number can have disastrous results.
• Tax returns contain confidential information that should be protected from prying eyes. File away completed returns and copies in a secure place.
• The taxpayer will need to sign their own tax forms, as the signature attests to the form’s truth, accuracy and completeness under penalty of perjury. Perjury means “telling a lie under oath” which emphasizes the need for honesty in filing taxes.
• It is of utmost importance in paying attention to taxes, filing on time and taking IRS obligations seriously.

For Assistance

If you need assistance, the Volunteer Income Tax Assistance (VITA) program offers free tax help to people making $53,000 or less.  The following link lists the types of returns they will or will not do, as well as what you will need to bring when meeting with a volunteer.

To locate a site near you:  irs.treasury.gov/freetaxprep.

Do It Yourself

There are several online tax software programs mentioned by the IRS which offer free e-filing.  These programs will ask a series of questions which will take you through the process and then e-file your Federal tax return.  Several of these software programs will charge you a nominal fee to submit your State tax return.  Or you can take a look at myfreetaxes.com , a service of H&R Block which offers free filing for Federal and State Taxes.  Be sure to save a copy of your return along with your important documents.

When Can I Expect My Refund?

The IRS states that most refunds are issued in less than 21 days, as long as there are no mistakes or omissions.  If you file a paper tax return, it can take up to 6 to 8 weeks to process your return.  You can check the status of your refund at irs.gov/Refunds.

Material taken from the following website:

forbes.com.