Do Minors Have to File Taxes?

Do minors have to file taxes?

Sometimes — especially if you earned more than $13,850 from working a job, more than $400 from contract work, or more than $1,250 from investments in 2023. But it depends on the person. 

As a minor, you aren’t exempt from paying taxes. But even if you have to pay them, you’re not always required to file a separate tax return from your parents. There’s a difference:

• Paying taxes refers to literally paying money to the government for taxes you owe with a check, electronic payment, or withholding (when an employer takes taxes out of your paycheck for you)
• Filing taxes is the act of preparing and submitting a tax return — the paperwork you send to the IRS each year through Form 1040, the US Individual Income Tax Return 

Minors who owe taxes from working generally have to file their own returns. However, “if the only income earned by a dependent child is investment income… a parent may elect to report this income on their tax return,” said Edward Nisanov, EA, a tax advisor and founder of the Nisanov Tax Group. 

There are two main factors that determine whether a minor has to pay taxes or file their own tax return: 

• Dependency status
• Income

How being a dependent impacts your taxes

Minors who qualify as dependents have to pay taxes if their income exceeds certain thresholds — more on those below.

To be a dependent, you must:

• Be under age 19, or under age 24 if you’re attending school full time
• Live with your parents for more than half the year
• Not provide more than half of your own financial support

When should a minor who isn’t a dependent file taxes?

If you’re a minor who isn’t a dependent child, your tax obligations are similar to an adult’s. You’ll have to file your own tax return as long as you make more than $13,850 in W-2 income in 2023, or more than $400 in self-employment income.

At what income does a minor need to pay taxes?

Assuming you are a dependent, there’s one more step to determine whether you need to pay taxes: your income.

Both how much money you made and where that money came from matter. These two different types of income come with different requirements for filing:

• Earned income is money you make from working. It includes your salary or wages, tips, professional fees, or —- for students specifically — taxable scholarships
• Unearned income comes from investments. This includes interest, dividends and royalties, and capital gains — when you buy an investment for one price, and then sell it at a higher price. The IRS also considers distributions of interest, dividends, capital gains, and other unearned income from a trust to trust beneficiaries to be unearned income

Income limits based on income type

For 2023, a minor will generally need to file taxes if they have any of the following:

• At least $13,850 in earned income
• At least $400 in self-employment income
• At least $1,250 in unearned income

That’s up from 2022, when the thresholds were:

• At least $12,950 in earned income
• At least $400 in self-employment income
• At least $1,150 in unearned income

There’s one possible exception to this rule. If you only have unearned income, there’s a chance that you can take care of your taxes through your parents’ return instead of filing one of your own. (To learn how, skip to the section on kiddie tax.)

Where do these numbers come from?

The numbers above might seem arbitrary, but they reflect different elements of the tax code. To learn more about then, read on, or skip ahead to learn what to do if you have both earned and unearned income.

For earned income

$13,850 is the regular standard deduction amount for 2023. 

The standard deduction is a tax deduction that all taxpayers in the US can claim. (The amount varies depending on your “filing status” — that is, whether you submit your tax return on your own or with a spouse. $13,850 is the 2023 amount for a single filer.)

Like other tax deductions, the standard deduction lowers your taxable income. You subtract deductions from your income to figure out how much of it you’ll actually pay income taxes on. 

If your earned income $13,850 in 2023, it’ll be reduced down to zero by the standard deduction. 

For self-employment income

Anyone who earns more than $400 from freelancing, independent contracting, or a small business has to file taxes. That goes for both minors and adults.

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For unearned income

$1,250 is exactly half of the “kiddie tax” thresholds for 2023. This is an extra tax that minors sometimes have to pay on their investment income. If you’d like to learn more about it, you can skip down to the kiddie tax section.

What if you have both earned and unearned income?

It can get confusing if you have both earned and unearned income. There’s a specific threshold for filing taxes based on your gross income — earned plus unearned. 

For 2023, minor dependents with both types of income need to file if their gross income is more than the greater of these two numbers:

• $1,250
• Their earned income plus $400 (up to $13,850 total)

For 2022, it was the greater of:

• $1,150
• Their earned income plus $400 (up to $12,950 total)

That means there’s a chance you’ll need to file even if your earned, self-employment, and unearned income are all below the individual thresholds for those specific income types. (Again, there’s an exception stating that, if you only have unearned income, you can potentially report it through your parents’ return.)

Tax filing requirements for a minor with earned and unearned income

For example: In 2023, Jamie, who is a 17-year-old student claimed as a dependent by his mom, made:

• $2,000 as an SAT tutor on W-2
• $300 selling Harry Styles merch on Depop
• $500 in investment income from DraftKings stock

The $2,300 he made as an SAT tutor and Depop seller is earned income, and the $500 from buying stock is unearned income. Will he have to file a tax return? 

Actually, yes — even though:

• His earned income of $2,400 is below $13,850
• His self-employment income of $300 is below $400
• His unearned income of $500 is below $1,150

Why? It’s because of how his gross income adds up.

Jamie’s total earned income is $2,300. That plus $400 is $2,700. That’s more than $1,250, so he’ll need to compare his gross income to $2,700 to figure out if he needs to file.

His gross income is $2,800 ($2,000 + $300 + $500). That’s more than $2,700, so he still needs to file taxes.

What is the kiddie tax rule?

The kiddie tax rule states that a minor’s unearned income gets taxed at their parents' rate if it surpasses a certain threshold. For 2023, that’s $2,500 — up from $2,300 in 2022.

Kiddie tax was created as part of the Tax Reform Act of 1986 to discourage wealthier parents from transferring assets to their children to take advantage of their children’s lower tax rates. (The children’s rate is generally lower than their parents’ because their income is lower.)

What happens if you don’t earn enough to pay the kiddie tax?

“The first $1,250 [of a minor’s unearned income] is tax free,” said Edward Nisanov, EA, a tax advisor and founder of the Nisanov Tax Group. “The next $1,250 is [taxed] at the child’s tax rate.”

If you are on the hook for kiddie tax, there are two ways to calculate it:

• Through Form 8615 (submitted by the minor)
• Through Form 8814 (submitted by their parents)

When to submit Form 8615 as a minor

You only need to submit Form 8615 if you meet all of the following requirements:

• Unearned income: As a minor, you had more than $2,500 in unearned income in 2023 ($2,300 in 2022)
• Age: You were either under age 18 at the end of the tax year, 18 by the end of the tax year, or between 19 and 24 and a full-time student
• Financial support: If you were 18 or older, you earned income didn’t make up more than half of how you supported yourself financially
• Parents: At least one of your parents was alive at the end of the tax year
• Required to file: You’re already required to file a tax return for the year and aren’t filing a joint return with a spouse

You’ll attach this form to your own tax return when you file.

When to have your parents submit Form 8814

If you don’t meet the requirements above, your parents may be able to file Form 8814 to report your interest or dividend income on their tax return instead. This gets you out of having to file your own return.

Here are the criteria you should meet for your parent to file IRS Form 8814:

• You were under age 19 (or under 24 and a full-time student) at the end of the tax year
• Your only income was from interest and dividends — including capital gain distributions and Alaska Permanent Fund dividends
• Your gross income for the year was less than $11,500
• You aren’t filing your taxes jointly for the year 
• You didn’t pay any estimated taxes for the year (including any overpayment last tax year that you applied to this tax year’s estimated tax)
• You didn’t have any federal income tax withheld from your income

If your parents don’t file taxes jointly, here’s who should include Form 8814 with their return:

• If your parents are married but file separately: Whoever has more taxable income
• If your parents are divorced: Whoever has custody of you
• If your custodial parent files separately from a stepparent: Whoever has more taxable income — your parent or your stepparent 

Can minors take business write-offs?

The short answer is: Yes, you can take business write-offs as a minor, as long as you have 1099 income. 

What counts as 1099 income?

1099 income encompasses anything you earn from freelancing, contracting, odd jobs, or other self-employed work. With this kind of income, you’re treated as a business owner for tax purposes.

A good rule of thumb to determine if you if you 1099 income is if you do app-based work or work for yourself. For example, you might be DoorDash delivery person or Uber driver, sell items on Depop or Etsy, or babysit.

What counts as a business write-off?

To count as write-offs, your expenses have to be:

• Ordinary: Common and expected for your industry
• Necessary: Helpful — if not actually indispensable — to doing your job

You can use these business write-offs to lower your taxable income. For example, if you make $1,000 from babysitting, but spent $400 on job supplies, you’ll only be taxed on $600. You can claim them in addition to the standard deduction.

Afraid of missing write-offs? Give Keeper a try. Our app scans your purchases for business expenses and writes them off for you, so you can spend less time updating spreadsheets and scanning receipts.

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There are several potential kinds of business write-offs for jobs common among teenagers, such as babysitting or online selling. Here are some examples:

• ⛽ Gas for driving between client homes, schools, activities, appointments, and playgrounds, or for driving to the post office to drop off parcels. (Calculating the business-use percentage of your car can be tricky, so check out Keeper’s guide to writing off car expenses to get started) 
• 🧽 Supplies you use on the job, like notebooks, pencils, first-aid kits, or sunscreen 
• 📮Shipping supplies, including tissue paper, packing tape, boxes or padded envelopes, or bubble wrap
• 🪧 Advertising costs for your business, like printing neighborhood fliers
• 🔎 Background checks and other screening fees that your clients didn’t cover
• 🛡️ Insurance, including liability insurance
• 💳 Credit card and bank fees‍
• 📱 Cell phones you use to find and communicate with clients. (If you’re on a family plan, you can still deduct the portion used for work. Learn more about that in Keeper’s guide to deducting your cell phone bill)
• 📚 CPR training and certifications
• 🧺 Home office and storage
• 💰PayPal fees

Note that if an expense is used for personal reasons too, then you can only deduct a proportion you use for your jobs. This might apply to your phone or Netflix account, for instance.

Should a minor ever file taxes if they’re not required to?

Maybe. There are some situations where it makes sense to file a tax return even if you aren’t required to. For instance, you might have a refund to collect — you can only claim it if you file. This is only likely to happen if you work a W-2 job.

“Taxes are generally withheld from every paycheck by the employer [no matter] the age or minor status of the employee,” said Nisanov, the tax planner.

“It may make sense to file a tax return to claim back the federal taxes withheld. It may be a few hundred dollars, and that could be a lot for a minor child — that could be their concert ticket, new clothes, new tech, or even seek money for their next big business idea!”

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How to file taxes as a minor

Filing taxes as a minor isn’t much different from filing taxes as an adult, but if it’s your first time doing it, it can be a little overwhelming. You’ll want to file Form 1040, just like any other taxpayer.

First, if you’re a dependent, check the box on the form that indicates someone can claim you as a dependent. 

Next, you’ll want to determine what kind of income you have: W-2, 1099, or unearned. If you have multiple types of income, follow the instructions in all the relevant sections below.

If you have W-2 income

A W-2 form is a tax form businesses use to what they paid their employees — and the taxes withheld from that compensation. If you get a W-2, that means you’re paid through an employer’s payroll, and you have taxes withheld from each paycheck and submitted to the IRS on your behalf.

You’re likely to have W-2 income if you’re officially employed by someone else. Maybe you work as a lifeguard at the pool, a cashier at Starbucks, or a clerk at UPS.

You’ll report your W-2 income on your Form 1040, in box 1a.

Unlike 1099 workers, W-2 workers can’t take write-offs.

If you have 1099 income

If you’re a minor with 1099 income, you won’t have any taxes withheld from your income throughout the year — you’ll have to take care of it all yourself. You'll also have to pay self-employment tax on your earnings in addition to income tax. 

Self-employment tax, more often known as FICA (Federal Insurance Contributions Act), comprises two taxes — Social Security and Medicare. The combined self-employment rate for FICA is 15.3%.

Your self-employment income might be reported on another type of tax form called a 1099 form. As a freelancer, you might get a couple of different types:

• A 1099-NEC is used to report money made to independent contractors. You'll only get a 1099-NEC if a single client pays you $600 or more, so it’s possible to do lots of contract work and not get a single 1099-NEC form if your income for each client falls below the 
• A 1099-K form is for payments made via credit cards, or through apps like PayPal or Venmo

1099 workers can take write-offs for business expenses for the work they do. You’ll report both your 1099 income and your write-offs on Schedule C.

Then, you’ll use Schedule SE to calculate your self-employment taxes.

You’ll file both these forms with your Form 1040.

If you have unearned income

You'll report your unearned income on a couple of different forms, depending on what kind of income it is.

Interest and dividends

Report your interest and dividends on Schedule B.

Note: You might also get 1099 forms reporting the interest and dividends you earned, as long as it was more than $10:

• 1099-INT: For interest
• 1099-DIV: For dividends

(Confusingly, this type of income isn't generally referred to as "1099 income." That name is often reserved for self-employment income.)

Capital gains

To report your capital gains, use Schedule D. Capital gains occur when you buy an investment for one price, and then sell it at a higher price. You may have them if you sold stock, mutual fund shares, or even concert tickets, for example.

If your capital gains came from selling an investment through a broker, you may get a 1099-B. Unlike most other types of 1099 forms, there's no income requirement to receive 1099-B.

Finally, don't forget to include your Form 8615 if you owe kiddie tax.

Whether your earnings come from tutoring pre-calc, selling vintage tees, or buying stock, Keeper can help. Download the app, and we can help you with filing, whether you’re doing your taxes for the first time or the thirtieth time.

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Do parents need to report their children's income?

Maybe, but only if your child made less than $11,500, all in the form of interest and dividends, and you file Form 8814 reporting that for them. 

Your dependent’s earned income, from jobs or self-employment, doesn’t go on your return. If they need to pay taxes on it, they’ll have to file their own return.

Can you still claim a child as a dependent if they’re earning income?

Yes. If you’re a parent with a child who’s earning income, you can still claim them as a dependent as long as other dependent rules still apply. They’ll just have to file their own tax return. 

Filing taxes can be confusing, especially if you’re a minor. But by following these guidelines, you’ll have a better understanding of whether you have to file your own taxes, and how to do it. No matter your age, you can avoid clashing with the IRS over your income, as long as you stay organized and get help when you need it.