Taxes can be a challenge for many teens and young people due to a lack of information provided in school and often answers aren’t simple to come across when you search for them. Luckily, if you’re under the age of 18, you don’t have to pay taxes! Well, not exactly for some people, if you’re working part time job you may have to file, but you’ll have more flexibility on what you can get away with for taxes but that will be covered later on. For now, let me explain the different types of taxes.
What are taxes? And the different types:
- Taxes: Basically, whatever paycheck you get from work the government takes a certain percentage of it. This is for all goods and services.
The main types of tax are income and sales tax:
- Income tax: Based off an individual’s own income, or business profits
- Sales tax: The tax put on goods and services, everyone is charged the same rate. It varies by state, for example, Florida has a 7% sales tax.
- Payroll Tax: Tax is deducted from an employee’s paycheck and is paid by both an employee and employer.
- Capital Gains Tax: This is applied to the profit made from an investment when it’s sold. Such as stocks, property, land and business. This rate can vary depending your tax bracket.
- Property Tax: It’s in the name, taxes you pay on your own property. This value is calculated by your local government.
- Estate Tax: The fair market value of a deceased person’s property. This includes cash, real estate, insurance, etc.
- Inheritance Tax: This is a state tax paid by beneficiaries of an estate on the amount inherited. So basically, if a beneficiary receives an inheritance that exceeds a certain amount like $100,000 they’ll have to pay the state some percentage of the money.
So, now that this basic information is out of the way let me start explaining the confusing stuff.
Filing Taxes
I previously mentioned that people under 18 do not need to file for taxes. But that is not completely true. If you’re ages 13-18 and have a part time job you might need to. Let me break this down:
- The limit for teenagers set by the IRS is $15,000 (yearly income) in 2025, so if you make more than this in a year you most likely need to file
- However, there are loopholes to this, such as being claimed as a dependent under your parent’s taxes or asking your parents to help you.
- If asking your parents isn’t an option, you can use resources such as Turbotax and other tax sites that will help you calculate and file your personal taxes.
- These are the necessary forms you’ll need when filing: W-2 form from your employer or the 1099-NEC form for self-employment income. Along with your social security (Hopefully you know what that is) or an Individual Taxpayer Identification Number (ITIN)
For the young adults reading this (people over 18) here is how you’ll most likely file your taxes.
- Most of your income and filing status will determine the tax bracket your in, this in turn, determines your tax rate. (Recap: A tax rate is the percentage of income that is taxed by the government)
- When filing taxes it’s definitely a good idea to hire someone to do them for you. If you can that’s great, if you can’t it’s still okay. Either way you’ll need all of these forms when filing and should have all the information necessary for your tax return.
- Form W-2 (from employer), form 1099-DIV (Investment dividends and distributions), form 1099-INT (Interest income), form 1099-MISC (Miscellaneous income), form 1099-NEC (For independent contractors), form 1099-G (Government payments)
- Make sure to also have bank records, credit card statements and receipts if you intend to claim tax credits (Tax credits will deduct money directly from what you owe on your taxes). A common way to earn tax credits is through charitable donations.
- I’m going to assume most of you reading might be filing taxes on your own for the first time. When doing this you’ll need to indicate your filing status. There are five options: head of household, married filing separately, married filing jointly, widowers or single. Most of the people reading this are going to be single filers, if not you can still get, and an idea of the concept (Videos are linked at the end just in case). This is important since it will determine your tax bracket, tax rates and standard deductions (Amount you can deduct from your taxable income)
- The standard deduction amount for single filers in 2025 is $15,000
- It’s important to file for tax returns as you could be subject to penalties from the IRS, you also get some money back after filing
Hopefully this breakdown helped explain what entails for teens and adults when it comes to taxes. Keep in mind the main aspects are asking your parents for help or hiring someone to do them for them for you. If not the IRS and other government sites provide resources on how to file. I’ll provide additional resources for you to reference back to or get better understanding.