Is your child taking a job this summer? If so, you both may have questions about taxes. The following information may be helpful.
For 2014, your child can earn as much as $6,200 and not pay a dime in federal income taxes. If your child’s earnings won’t exceed this amount, consider having the child claim “student – exempt” when completing the federal withholding allowance certificate (Form W-4). If this is the child’s only income and the total doesn’t exceed the $6,200 limit, he or she then won’t have to file a 2014 tax return.
Don’t overlook the fact that there will still be withholding from your child’s paycheck for social security and Medicare taxes. But those payments are not income taxes, and they cannot be refunded to the child.
Keep in mind that self-employment income, tips, and interest, dividends, and stock sales can affect your child’s tax return filing requirement.
Realize also that as long as you provide more than half of your child’s support, you can continue to claim the child as an exemption on your tax return. Your child will lose his or her exemption, but that exemption deduction is typically more valuable to you than to your child.
If you need more details about the tax implications of your child’s summer job, give us a call. We’re happy to help.