Teen taxes are just like adult taxes but probably a little simpler. However, as a teen, completing your tax return might seem daunting. With some help from the Talking Cents blog, your parents and some other research, you can easily be on your way.
Teen Taxes & Finance Guide
The first thing you need to complete your taxes is a reason to do so! If you worked in the 2016 calendar year, then you will need to file taxes. When you were first hired, you filled out a W-2 form for your employer. As a result of how you filled out this form, a certain amount of money from each paycheck will be withheld.
Here is the list from H&R Block of standard deductibles:
- Social Security: money that goes toward Social Security benefits in retirement.
- Medicare: an insurance plan that provides medical benefits to Americans over the age of 65 and individuals with certain disabilities.
- Federal Income Tax: a designated percentage of income given to the federal government.
- State Income Tax: for states that collect state taxes, it’s a designated percentage of income given to your local government. (This percentage varies from state to state.)
There are a few other points from H&R Block to help with teen taxes:
- Teens earning less than $6,300 over the course of the year may claim an exemption from income tax withholding by giving the employer a new Form W-4, and won’t have to pay those taxes.
- You will need to file a tax return to get a refund.
- Calculate your projected annual income to learn whether federal taxes must also be taken into account.
Consult your family’s financial adviser for more guidance on completing forms for teen taxes.
Financial Tips for Teens
Beyond teen taxes, you should be taking care of your finances in a bigger way. This includes budgeting, saving, planning, investing and more. Therefore, here is a checklist to get you on your way to becoming a financially savvy teen.
- Make & follow a budget. Track income, spending, and saving
- Consider saving for future expenses, like a car, travel, college textbooks, etc
- Create SMART goals based on these considerations
- Keep good financial records
- Remember to start investing for retirement as soon as you are making a steady income and feel comfortable doing so
These checklist items can go a long way towards developing excellent financial habits and stability for your future. Finally, keep learning and growing to do your best with your finances and goals.
To learn more about budgeting and managing your finances, visit ACCC’s Youth & Money resource section.