It’s summer and you might have a child that working for the season for the first time. This new step is exciting for everyone but might have you wondering what the tax implications are. Will your child have to pay taxes on the income earned at a summer job? It’s important to know the guidelines and keep good records. At Jackson and Associates CPA, PA, we offer reliable tax advice and preparation. Here are a few guidelines to follow if you a child working this summer.
- Tips from waitressing, etc., are considered taxable income.
- Net earnings of $400 or more from self-employment (e.g., babysitting, lawn mowing) are subject to self-employment tax, in addition to income tax.
- Your child may be taxed on unearned income (dividends and interest) from bank and investment accounts set up under your child’s Social Security number.
- Your child can claim an exemption from federal income-tax withholding if he or she had no income-tax liability last year and doesn’t expect to owe income taxes this year.
When all is said and done, it’s better to not deal with tax issues on your own. Feel free to give our Largo, FL CPA Firm a call at 727-544-1120 to find out how we can provide you with the answers you need. Or, you can request a consultation online to learn how we can help with your tax questions.