The short answer is YES.
Minors who are employed and earn income are generally subject to federal withholding taxes, just like adult employees. Employers are required to withhold federal income taxes from employees’ paychecks if the employee is expected to earn more than a certain minimum threshold for the year – usually the standard deduction for their filing status. In 2023, the standard deductions are $13,850 for single filers, $27,700 for married filing joint, and $20,800 for head of household.
Example: Betty is a cashier at her local diner and lives in Kentucky with a minimum wage of $7.25 an hour. As a minor, she will likely make no more than $8,700 for the year, which is under the single threshold of $13,850. Betty doesn’t have a federal filing requirement and, if her employer did not withhold any federal income tax, she may not need to file federal taxes at all.
When an individual, including a minor, earns income through employment, their employer is required to withhold Social Security and Medicare taxes in addition to withholding federal income taxes from their paychecks. The amount of tax withheld depends on several factors, including the minor’s total income, their filing status (i.e., single or married), and the information provided on their Form W-4, which helps determine the appropriate withholding. Additionally, the minor may still be responsible for filing a federal income tax return to determine if they owe any taxes or are eligible for a refund, especially if they have other sources of income (investments) or are eligible for tax credits.
Example: Tommy is employed by the local movie theater in Michigan with a minimum wage of $10.10 an hour. He will most likely make no more than $12,120 for his work at the movie theater. However, Tommy has dividends that his grandparents gave him, which earns him $2,500 a year in dividend income. Due to these dividends, Tommy now has a filing requirement regardless of how much money he makes from the movie theater.
Can my minor child earn income and still be a dependent?
The answer is YES!
Example: Scotty and Amanda are camp counselors in Montana where the minimum wage is $9.95 an hour. They work for 10 weeks during their summer break. As minors, they will most likely not make more than $3,980 each for their summer jobs. While they are each still a dependent of their parents, they may still need to file a return for a refund of withholdings if their employer withheld Federal Income Tax.
For more information on Tax Rules for Children and Dependents,
Publication 929, Tax Rules for Children and Dependents, is a great resource.
What if my minor child has gross income greater than $13,850 in a year? Do they need to file a tax return?
Your minor child now has a federal filing requirement. Without getting into credits and deductions, generally, the minor child would want to file a tax return to see if they qualify for any credits or are due a refund.
Example: Samantha is a barista at a coffee joint in California where the minimum wage is $15.50 an hour. As a minor, she will most likely make around $18,600 for the year. This exceeds the minimum threshold of $13,850 for the year. Her employer undoubtedly withheld federal income, FICA, and state taxes from her paycheck. Samantha will want to file a tax return to claim any available credits and get a potential refund.
Please note that state requirements vary from the IRS. You should check with your state to determine if there is a state filing requirement, regardless of whether or not there is a federal requirement.