Income taxes are collected from everyone no matter how much money they earn. The government creates revenue for itself through our tax dollars. They can fund the military in wartime and provide social programs to benefit its citizens.



It is important for your teen to understand that an hourly wage is not an exact way to calculate their weekly income. Explaining how income taxes function will help them comprehend why their hourly wage can only provide an idea of how much they have earned during a day of work and that the number of hours they work multiplied by their hourly wage will not be the same number they will see on their paycheck.

When a teen gets a job, they will have to complete a tax form that they probably will not understand. Tax forms must be filled out properly because the government will use that information when determining how much and which taxes to take out of their paycheck. For these reasons, parents need to help their teens understand the details of tax forms and assist them as they fill them out.

An individual is not required to file their taxes if they earn less than a specific amount that has been set by the government. Most teens who work fall into this category and are therefore tax exempt, especially during their first year of work.

Show your teen how to get the most money that they can on their check. Even teens are allowed to claim deductions. They can claim one deduction even if they are included on their parents' tax return. That deduction will net them more money in their pocket. Since they won't make enough to file, this is a wise decision for them to make.

Teens also need to understand that when their earnings increase after high school or college, the tax laws change for them. More earnings mean that they will file a tax return and pay more taxes. But, for now, they have an advantage and should take full benefit of it.

Babysitting and other self-employment is subject to taxes if they make over a certain amount of money. Selling items on eBay could push your teen over the allowable limit for non-filers. In that case, discuss the forms needed to be filled out at tax time. Encourage your teen to save their money wisely in case the IRS deems that they owe tax money. Check with the IRS website to find out what the income limit is for the current filing year.

Taxes can be a shock for teens when they open their first check. Discussing the matter with them when they take on their first neighborhood job will prepare them for the eventuality. Foster the idea of good record keeping so it is easy to find out if they need to file or not at the end of the year.