Summer is approaching, and many teenagers living here in Boston or elsewhere may begin thinking about getting a job to earn some extra money. Entering the workforce can provide a sense of freedom and independence, but it can also require a wakeup call to the responsibilities that adults tend to assume without much thought. For instance, the IRS expects teenagers to pay taxes and possibly even to file an income tax return.
Age has nothing to do with fulfilling this civic responsibility. A teen may expect to bring home all of his or her wages, and getting that first paycheck could be a shock. When a teenager takes a job, his or her employer is responsible for deducting and paying payroll taxes for every employee, including those who have not even reached the age of majority.
Many teens have an entrepreneurial spirit from a young age. According to the IRS, even money earned from babysitting, mowing lawns or walking dogs should be reported. Teens and their parents may not realize that even someone so young could be considered self-employed for tax purposes, especially if a significant amount of money is earned.
Many Boston teens do not have a good understanding of the tax implications of working at a young age. They and their parents will more than likely have numerous questions, including whether the need for filing an income tax return exists. Obtaining more information regarding what the IRS expects from those entering the workforce could help lessen the impact of taxes and keep that entrepreneurial spirit alive. Gaining such an understanding as a teenager could result in making good financial decisions in the years to come.