In this article, we will explore the factors determining whether high school students are exempt from taxes, including their income level, employment status, and age.
Taxation is an essential aspect of every economy. Citizens must understand their tax obligations to avoid running afoul of the law. As high school students transition into adulthood, many earn income through part-time jobs or summer employment.
This begs the question: are high school students exempt from taxes? While young people may assume they are not required to pay taxes, the reality is more complex.
We will also discuss some key tax obligations that high school students may need to be aware of. This includes filing a tax return and paying estimated taxes.
By understanding these elementary tax concepts, high school students can become better equipped to navigate the complexities of the tax system and ensure compliance with applicable laws.
Disclaimer: Please note that the information provided in this article is based on research and general knowledge. Thus, it should not be considered professional tax advice. Please consult with a qualified accountant or tax professional for specific advice regarding your individual tax situation.
Jobs For High School Students
High school students can take on many types of part-time jobs to earn extra money. Some of the most common jobs include working in retail, food service, babysitting, or nanny.
Retail jobs may include working in a clothing store, grocery store, or electronics store. While food service jobs may consist of working in a restaurant, coffee shop, or fast food chain.
Babysitting and nanny jobs may involve caring for children in the family’s home, private daycare, or preschool setting.
In addition to providing income, part-time jobs can help high school students develop effective skills. This includes communication, time management, and customer service. They can also provide valuable work experience to help them stand out when applying for future jobs or internships.
To learn more about typical high school jobs and how to find them, be sure to check out my other article!
Paying Income Taxes
In general, anyone who earns income in the United States is required to pay federal income tax on that income. This includes high school students who earn money through part-time jobs or summer employment. However, there are some circumstances where high school students may be exempt from paying income tax.
A factor that can affect whether high school students need to pay income tax is their employment status. Suppose a high school student is classified as an employee of a business. In that case, their employer will typically withhold income tax from their paycheck and remit it to the government on their behalf.
However, if a high school student is self-employed or earns income from freelance work, they may need to pay self-employment taxes and federal income taxes.
It’s also worth noting that some states have their own income tax rules, which may differ from federal regulations. In some cases, high school students may be exempt from state income tax even if they must pay federal income tax.
Minimum Income Threshold
One factor that can affect whether a high school student needs to pay income tax is their income level. For the 2021 tax year, single individuals under 65 who earned less than $12,550 were not required to file a federal income tax return.
This threshold can change from year to year! So it’s critical for high school students to check the current year’s tax rules to determine whether they need to file a return.
Thus, in a way, high school students are exempt from taxes. That is if they don’t work or gain an income below the minimum threshold.
Claiming Tax Deductions
High school students who have earned income can claim certain tax deductions or credits on their tax returns. One example is the standard deduction, which reduces their taxable income.
For the 2021 tax year, the standard deduction for a single individual is $12,550. Meaning that high school students who earned less may be able to reduce their taxable income to zero.
Another type of tax credit that high school students may be eligible for is education tax credits. These credits are available to students enrolled in college courses or vocational schools and can help offset the cost of tuition and other education expenses.
Examples of education tax credits include the American Opportunity Tax Credit and the Lifetime Learning Credit.
High school students who have earned income from a part-time job or summer employment may also be able to contribute to a traditional IRA or a Roth IRA. Contributions to a traditional IRA may be deductible on their tax return. Contributions to a Roth IRA are made with after-tax dollars but can grow tax-free.
In addition, high school students who make charitable donations may be able to claim a deduction on their tax returns. However, it’s important to note that only taxpayers who itemize their deductions can claim a deduction for charitable donations.
Students must keep accurate records of their income and expenses to take advantage of any tax deductions or credits they may be eligible for. They should also seek guidance from a qualified tax professional to ensure that they are complying with rules and regulations.
Estimated Taxes
Estimated taxes are payments that taxpayers make to the government on a quarterly basis to cover their expected tax liability for the year. They are typically generated by individuals who are self-employed, freelancers, or who have other sources of income that are not subject to withholding. It may include rental income, investment income, or capital gains.
High school students who have earned income from a part-time job or summer employment may be required to make estimated tax payments if their income is high enough and they expect to owe a certain amount of tax for the year.
Generally, if a taxpayer expects to owe at least $1,000 in taxes for the year after subtracting their withholding and refundable tax credits, they must make estimated tax payments.
However, high school students who are employees and have income taxes withheld from their paychecks by their employer are not required to make estimated tax payments as long as their withholding covers their expected tax liability for the year.
High school students who are self-employed or have other sources of income that are not subject to withholding must keep track of their income and expenses throughout the year to determine whether they need to make estimated tax payments.
Federal Vs. State Taxes
High school students earning income from a part-time job or summer employment may wonder whether they need to pay federal and state income taxes.
The short answer is that it depends on several factors, including the income they earn, the state they live in, and their filing status. First, it’s important to understand the difference between federal and state income taxes.
Federal income taxes are taxes the federal government levies on all taxable income earned by individuals and businesses across the United States.
On the other hand, state income taxes are levied by individual states on taxable income earned within their borders.
Whether high school students must pay federal and state income taxes depends on several factors. In general, if they earn income above a certain threshold, they must pay federal and state income taxes. However, high school students who earn below the threshold may be exempt from taxes.
It’s crucial for high school students to understand the tax laws in their state and seek guidance from a qualified tax professional to ensure that they comply with all applicable tax rules and regulations.
Additionally, high school students claimed as dependents on their parent’s tax returns may have different tax obligations than those who file as independent taxpayers.
Final Thoughts
In conclusion, the question of whether high school students are exempt from taxes is complex. It depends on several factors, including the amount of income they earn and their filing status.
However, high school students who earn below a certain threshold are generally exempt from taxes. High school students need to understand their tax obligations and seek guidance from a qualified tax professional to ensure that they are complying with all applicable tax rules and regulations.
With proper planning and education, high school students can confidently navigate the tax system and ensure that they meet their obligations while keeping more of their hard-earned money. Remember, high school students are exempt from taxes if they earn below a certain threshold.
