There is a common misconception that children under the age of 18 don’t have to pay tax in any form. Sadly for them, this is not the case.
If you are a 17 year old and earning money, you should file a tax return, even if you are earning less than the income tax threshold. The younger you can learn to do your own taxes the better.
The tax paying thresholds are different for under 18s and full-time students – compared to adults and people in full-time employment.
In this article, we will include everything you need to know about the tax laws that are relevant for 17 years old’s. We have also included some advice about filing your tax returns for the first time.
Should You File Taxes As A 17 Year Old?
No matter your age, if you are sent a tax return to file you should file it, or risk fines and legal recourse.
As a 17 year old, if you are working for yourself and earning money, receiving unearned money, or are working for an employer, then you should file a tax return.
In the sections below, we will talk about the thresholds that apply to you.
If you are new to filing taxes there are a few things you should be aware of:
- Your tax return will be due in April (the end of the financial year)
- You can get charged more money than you were expecting when you file your taxes, if you cannot afford to pay it straight away then you can apply for an extension
- If you are self-employed then you are responsible for submitting your own taxes
Tax Rules On Unearned Income For 17 Years Old’s
Unearned income is any money that comes into your possession – it could be a gift or a taxable dividend.
If you earn less than $1,100 there is no need to file a tax return.
If you earn more than $1,100 then you have to declare it on a tax return. Even if you have made less than $12,000 which is the minimum income tax threshold.
Tax Rules On Earn Income For 17 Year Old’s
If you earn more than $400 a year you will need to file a tax return. Even if you have earned less than $12,000 and are not eligible to pay tax.
If you are classified as a child dependent, then you have a slightly higher tax deductible allowance. It is currently $12,550 but this may go up this year.
If you earn less than $12,500 you should file your own tax return rather than adding it to your parent’s tax return. If you file with your parents you are more likely to have to pay taxes.
Taxes For Self Employed 17 Year Old’s
If you are self-employed and 17 then we recommend that you file a tax return if you make any money at all. Even if you make less than $100 you should get into the habit of tracking your income and filing your taxes.
If you earn over $350 then you must file a tax return, even though you won’t have to pay income tax unless you have earned more than $12,000 (or $12,550 if you are a dependent).
When you are self-employed, you will need to keep track of all your income and expenses and calculate your own taxes. The earlier you can get into the habit of doing this, the better.
Other Tax Rules
Some 17 year old’s may earn money in more than one way.
For example, they may get unearned income and money from an employer in the same year. Or they may be partially self-employed and partially working for an employer.
If this is the case then we recommend filing a tax return no matter how much you have earned.
However, if you have earned:
- At least $1,100 unearned
- At least $400 from an employer
- Or at least $350 self-employed
In one year, then you will have to file a tax return, even if all of your earnings are less than the income tax threshold.
What Is The Income Tax Thresholds For 17 Year Old’s?
For 17 year old’s who live on their own, the income tax threshold is $12,000.
If you are classed as a child dependent by your parents, guardians, or other relatives (they will be receiving a tax deduction for caring for you), then your income tax threshold will be $12,550.
Note – President Biden’s Build Back Better Act seeks to extend the child tax credit that was amended by the American Rescue Plan through 2022. These numbers look like they will change in the next few years, if not this year.
Tips For Filing Your First Tax Return
One of the things you can do to make filing your taxes easier is to keep track of any money that you earn. And make note of any money your employer withholds from you to make your tax payments.
You should make sure that you keep any paychecks and invoices in an easy-to-locate place. You may need to submit these with your tax return.
If you are self-employed, keep detailed records of all purchases, payments, and expenses related to your business throughout the year.
If you are a 17 year old that is earning money then it is in your best interest to file your own tax return. If you jointly file with your parents then you may end up paying more tax than you need to.
If you have earned $350 being self-employed, $400 from an employer, or $1,100 from unearned income then you will need to file a tax return. If you receive a tax return form from the IRS you must file it.
If this is your first time filing a tax return then we recommend that you get help from an adult and try to get your return filed on time.