My teenager wants a summer job, will it affect my taxes?

Summer is here, and your child may be interested in getting a summer job. One of the biggest concerns for parents of children who work, is how the family will be affected at tax time. We have compiled some simple answers to some of the most commonly asked questions by parents and students preparing for this milestone.

If my child gets a job, can I still claim him or her at tax time?

Yes, generally parents can still claim an exemption if their qualifying child is working. A qualifying child is one that is under the age of 19, or under age 24 and is a full time college student.

Is my child an employee or independent contractor?

Hiring persons as independent contractors is becoming much more common in today’s society. This means that your child could potentially be hired as an independent contractor verses an employee. As a parent, this is important for you to know, because the amount of taxes withheld will depend on this information. Make sure you explain the differences between employees and independent contracting with your child, so they can also understand the different tax implications.

If the child is an employee, you want to make sure he or she completes their W4 form. You may want to contact your accountant to ensure that it is being filled out correctly, so it doesn’t affect you or your child negatively at tax time.

If the child is an independent contractor, he or she will want to put aside money throughout the year to pay their taxes at tax time. As an independent contractor, the child can potentially deduct out-of-pocket expenses that are directly related to the work being performed and this can help reduce their tax liability.

Will my child have to file his or her own tax return?

If your child makes below a certain amount, he or she may not have a filing requirement. However, if your qualifying child does make enough to have a filing requirement, it does not automatically mean that you cannot claim their exemption on your return. In fact, in most cases the parents benefit more from the child’s exemption than the child does. Therefore, it is important to mark on the child’s tax return that their exemption is being claimed on your tax return.

How does a summer job affect my college students FAFSA application?

A summer job could potentially affect your students FAFSA application. In 2014, a college student could have earned $6310 towards the 2015-2016 school year. Although colleges urge families to apply to FAFSA every year regardless of their income, a student who is working during the summer could potentially end up receiving less student aid than anticipated. To make sure you and your family are aware of the general FAFSA requirements please call your students 2016-2017 school of choice for guidance from their financial aid department.

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Written by Desnoyers CPA

Desnoyers CPA

Known for her friendly, outgoing nature and her rare talent for financial foresight, Lydia Desnoyers has been serving individuals and small businesses in Florida since 2010. After earning her Master’s Degree in Accounting from Nova Southeastern University and her Bachelor’s Degree in Accounting from Florida State University, she became a Certified Public Accountant and a Certified Fraud Examiner.