Welcome to Being a Taxpayer

Keith L. Rucinski, CPA, JD
Chapter 13 Trustee
Akron, OH

taxpayer

Have you had the “talk”?

No, not that “talk”.

The talk about taxes.

By the time almost everyone graduates from high school, they have had a first job.  And with the first job becomes the necessity to understand income tax. While they may not make much from delivering pizza or being a barista on the weekend, they will soon, and they will be responsible for paying taxes.

Beginning in 2023, the federal government requires individuals to file a tax return if their gross income exceeds $13,850.  (See irs.gov – Form 1040 for 2023).  The age and living arrangements of the person doesn’t matter to the IRS.  Someone who lives with their parents, in a dorm or in an apartment, still needs to pay taxes if their income exceeds the specified amount.

Usually, the employer will deduct the proper amount of tax and send the individual the W-2 wage statement to help with filing taxes.   However, many jobs now use independent contractors (See BFine’s article on gig work).  As an independent contractor, taxes have not been withheld from payments.  The company/customer will send the individual a 1099 tax statement with the gross income, but no tax will be withheld.

The filing of a tax return does not necessarily mean any tax will be due (but the non-filing of the return can result in fines and penalties).  Even if the person must file a return due to their income, there may be deductions and exemptions available to lower tax liability to zero, resulting in a refund of the taxes paid.

One thing to remember is that the federal government only allows one individual deduction per person.  That means if a teen or adult child uses the deduction, the parent may not deduct their child on their tax return.  Sometimes the child does not need the deduction to get to zero liability and it is better off to let the parent deduct the child on the parent’s return. (Parents may claim their children as deductions up to age 24 if they are a student.)

The IRS has help for many first timer filers through their IRS Free File program. First time filers should know that the IRS has helpful customer service representatives and a robust website full of helpful information and needed forms.

In addition to federal taxes, most states have their own income tax requirements.  Information on those requirements can be found through your state’s department of taxation.

And lastly, there is the local income tax.  Depending if you live in a jurisdiction with income tax requirements (some townships and villages do not have an income tax, it all depends on the respective state law), taxes will need to file with the local taxing authority.

Everyone is always thrilled with the anticipation of their first paycheck, and disappointed to find out that taxes must be paid.  Most parents just smile and say, “welcome to being an adult”.


A public education project of the National Association of Chapter Thirteen Trustees

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DISCLAIMER
The materials on this website are for general information purposes only and should not be construed as legal advice, legal opinion, or any other advice on any specific facts or circumstances. You should not act or refrain from acting upon this information without seeking professional advice.