At 15 years old, do I need to pay tax on online earnings?

Question

I earn money online, and at $600 I am required to submit a W-9 form. I'm pretty sure that I am considered a dependent under my parents so I can earn up to around $5000 without getting taxed, but I'm not sure. Please help!

Answer 1

You'll probably have to pay some tax even if you earn less than $5,000. This appears to be self-employment income. If you earn more than $400.00 from self-employment you must file a tax return. At the very least you will be paying self-employment tax on your net income from this business activity at 15.3%. Assuming that you are still a dependent, you will start to incur income tax liability once your income exceeds $5,350 in 2007.

Since you are self-employed, you'll have to file Form 1040. Attach Schedule C to account for your income and business expenses. Then attach Sechedule SE to calculate the self-employment tax at 15.3% of the net profit. Complete the return and figure any income tax, add everything up and pay the tax due.

If it appears that you will owe more than $1,000 at tax time you will need to make quarterly estimated payments using Form 1040-ES. You can download that from the IRS website and use the worksheets to figure your estimated tax and the payments required. If you'll owe less than $1,000 you don't need to make estimated payments but you will have to pay the balance due in full when you file your tax return.

Using your estimate of $5,000 just as an example, you won't have any income tax to pay since your income is less than $5,350, but you will have to pay $612 in self-employment tax. You can make estimated payments against that liability if you wish but are not obligated to do so. If you don't, you will have to pay $612 with your Federal tax return.

You may also have state income taxes to pay as well. Check with your state's tax authority's website to learn about that.

Answer 2

No, if it's from self-employment and what you're doing is, the limit to not have to pay tax is $400, not $5000 - that's for someone who is working as an employee, with the employer taking out social security and medicare and paying matching funds to the government.

You won't owe income tax if you're under the limit which is a little over $5000, but you will owe self-employment tax.

You won't submit a W-9 form to anyone, but you are required to keep your own accurate records of what you take in. Also record any associated expenses.

Answer 3

Age is ONLY a factor in determining if your parents can still claim you as a dependent or if you could claim yourself. The purpose of a W-9 is for someone that pays you to request your SSN in order to report payments to the IRS. If they don't ask, you don't need to give them your SSN. If you are paid at least $600, from a single source, they must issue a 1099 and should have requested your SSN before paying you. IF your income qualifies as self-employment, you must pay self-employment tax because your income is more than $400. Contrary to what Judy said, it is not possible to determine if your income is self-employment income based on the information you provided.

Answer 4

You may have to, yes. Go to IRS.gov and download the publication "who must file?". Its free as a PDF.

Answer 5

what's the online site, I need to make more money! I am serious!!!!!