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.
- 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 (e.g., because anticipated earnings are less than the standard deduction for single taxpayers, $6,350 for 2017).