Teach your teenager about filing
Published 10:45 am Monday, February 20, 2006
By By MARY-ALLISON LANCASTER – Managing editor
First dates, first time driving and first jobs all entail one important factor – money. For parents, when teaching your teenager how to manage money, experts say it's important to teach them how to save money, use credit wisely and pay taxes when necessary.
Mike Sullivan, director of education for Take Charge America, a non-profit counseling company based out of Arizona, says parents should not only teach their children how to pay taxes, but explain why it is necessary.
Sullivan said that if a teen receives W-2s, or 1099s or other statements of income, they might not have to file, but even filing isn't required.
Vance Kilgore, a CPA with Hartmann, Blackmon and Kilgore PC in Brewton offers this advice for working teens.
Sullivan adds that it is still important for teens to become acquainted with taxes while their income is low become as income increases the tax laws become increasingly complicated.
Kilgore adds a for instance for 18 or 19-year-olds enrolled in college. He says, if they have a student loan and are being claimed as a dependent, teens can't claim interest on their student loan. Many students find that by being claimed as a dependent by their parents who pay more than 50 percent of their living expenses and work to supplement college expenses are unable to claim an exemption, so they have to pay more tax.
Generally teens earn money for some of the extras that are beyond a parent's budget. If a teen is working, wages are subject to social security and unemployment compensation taxes, which may exceed a federal or state tax liability if earning below the standard deduction.
Sullivan advises working teens of four things they should know about income taxes: