One thing we continually notice is that most kids who work are incorrectly having federal and state income taxes withheld from their wages. Please note that a working child will generally owe no federal income taxes unless wages earned exceed $6,300 (in 2015) and/or investment income exceeds $350.
Most of the kids are getting back all the federal and state income taxes withheld during the year. By claiming “exempt” on their W-4 forms, these kids avoid having federal income taxes withheld, which gives them more of their paycheck sooner, and also avoids the costs and headaches of filing a federal income tax return to get back those taxes that were unnecessarily withheld.
Andrew Schwartz, CPA and founder of The MDTAXES Network, recently published a 5-minute video to help children and students complete their W-4 forms correctly. This recorded presentation is available at: https://youtu.be/7ywlxeq-9nE.
This 5-minute video also explains the Social Security and Medicare taxes that are withheld from the wages of most US workers, and details what to do if a child will earn more than $6,300 this year and will ultimately owe income taxes on their wages.
With a child’s first or second job and filling out a W-4 form for that job, most kids are completing a tax form for the very first time. Please share this video with your child to help introduce him or her to the U.S. tax system at the same time your child is being asked to deal with federal income taxes at a very elementary level.