Minor Income Tax?

Question

My nephew wants to earn some money through either a cafepress account or by selling Google ads on his blog. He is currently fifteen years old. If he does this, does that mean he has to file for income tax? Also, what is the age and/or amount of income "line" that decides when one needs to begin filing income tax?

Answer 1

His filing status will be Single Dependent (if he can be claimed as dependent). He will not get personal exemption. Also the income from ads on his blog is self employed income. He must file if the self employed income is $400 or more in the year.

Filing Requirements for Dependents
For Single dependents, you must file a return if any of the following apply.
• Your unearned income was more than $850.
• Your earned income was more than $5,350.
• Your gross income was more than the larger of: $850, or your earned income (up to $5,050) plus $300.
• Your self employed income is $400 or more.

If a child has earned income, self employed income, winnings or capital gains, he/she must file separate return. Parents can't elect to include his/her income in their return.

Answer 2

As soon as he earns money he should look into whether or not he needs to file a return. If he is "self employed" he would need to file at dollar one. If he is an employee he might need to file to get any withholdings back. Filing does not mean he would owe taxes. If he is self employed he might owe some Social Security tax and no income tax. There are many variables. Is he someones dependant? Does he have any unearned income (interest, investments)? It sound like he would be self employed and so it is not that simple. He would begin owing the IRS as soon as he made a profit of about $410. Not taxes though Social Security. Taxes wouldn't kick in until about $5000-if it is earned income.

Answer 3

It's not an age limit, it's the amount of income, that requires him to file a tax return. Since this kind of income will be as an independent contractor, the earnings limit for the year where he'd have to file is $400. At that amount he wouldn't owe income tax, but would owe self-employment tax. Depending on where he lives, he might also have to file state and/or local returns.

Answer 4

First, the $800.......Bush has asked Congress for it, and said if they sent him a good bill with that in it he would sign it. It is far from being a "done deal". Congress hasn't even started debating it yet. Don't look for anything soon. Also, it won't be a "gift". It will give back (rebate) to taxpayers some of the tax money they have given the government in the form of taxes they have paid, up to $800, if they have paid in more than that. The news report I heard indicated the $800 maximum applied to married couples with single people getting less since there is only one of them. You really need a tax professional to look over your situation in conjunction with your parents situation. You do have to file a tax return because you earned over $3400. You will wind up zeroing out your tax liability just with the standard deduction which mean you will get back the portion of the $300 withheld that pertains to the Federal taxes, but not the Social Security, Medicare, or any State taxes that have to go toward your State income tax return. That will all be broken out on your W-2 you receive from your employer which is necessary for you to file taxes. So, you will wind up paying zero taxes, and therefore you are not a taxpayer this year which means you probably won't qualify for any rebates in the $800 deal you heard about. The reason I think you and your parents need to see a tax pro is because since you will zero out anyway, and since they are still supporting you, it may be to their advantage if you "give up" your dependency and let them claim you again for last year. It will help them save some money and won't hurt you. Your tax pro can explain it to you, and see if that works out or not. Good luck!

Answer 5

Contact a tax accountant, or call the IRS to ask this question.