Yes, teens have to pay taxes on their income under the same federal rules that apply to everyone else. There is no age exemption. Once a teenager’s earnings cross certain thresholds, they owe tax and generally have to file a return, and even when they don’t have to file, doing so is often the only way to get back money an employer already withheld.
When a Dependent Teen Has To File
Most teenagers are claimed as dependents, and the IRS sets separate filing thresholds for dependents. For the 2025 tax year, a dependent must file if any of the following is true:
- Unearned income (interest, dividends, capital gains) is more than $1,350.
- Earned income (wages, tips, self-employment) is more than $15,750.
- Gross income is more than the greater of $1,350 or earned income (up to $15,300) plus $450.
These figures adjust each year. For 2026, the standard deduction for single filers rises to $16,100, which lifts the earned income filing threshold for a dependent teen to the same $16,100.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 The unearned income threshold will also be adjusted; the final 2026 numbers appear in IRS Publication 501 when released.2Internal Revenue Service. Check If You Need to File a Tax Return
A dependent teen’s standard deduction isn’t the full amount an independent filer gets. It’s limited to the greater of a set minimum ($1,350 for 2025) or earned income plus a fixed add-on ($450 for 2025), capped at the regular standard deduction.3Office of the Law Revision Counsel. 26 USC 63 – Taxable Income Defined The formula is generous for teens who work and stingy for teens whose income comes only from investments.
File Anyway if Taxes Were Withheld
A teen whose income falls below every threshold may still want to file. If an employer withheld federal income tax from paychecks, the only way to get that money back is by filing a return and claiming the refund.4Internal Revenue Service. Tax Information for Students This happens constantly with summer jobs: the employer withholds based on the W-4, the teen’s annual income stays well below the standard deduction, and the entire withholding amount is refundable. Skipping the return means leaving that money with the IRS.
Payroll Taxes Come Out No Matter What
Beyond income tax, every W-2 paycheck has Social Security and Medicare taxes (FICA) deducted automatically. Social Security takes 6.2% of wages and Medicare takes 1.45%, a combined 7.65% from every dollar earned.5Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax These apply from the first dollar of wages regardless of how little a teen earns, and there is no standard deduction to reduce them. That’s why a first paycheck is always smaller than expected. The employer also reports wages on Form W-2, and how much income tax gets withheld depends on how the teen filled out Form W-4.6Internal Revenue Service. About Form W-4, Employee’s Withholding Certificate
Babysitting, Lawn Care, and Other Self-Employment
Money earned from babysitting, lawn mowing, tutoring, freelancing, or selling products online counts as self-employment income. Once net self-employment earnings reach $400 in a year, the teen owes self-employment tax even if total income is too low to owe any income tax.7Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) That $400 floor has not moved in decades and doesn’t adjust for inflation.
Self-employment tax is the self-employed version of FICA, but with no employer to split the bill the teen pays both halves: 12.4% for Social Security plus 2.9% for Medicare, totaling 15.3%.8Social Security Administration. Contribution and Benefit Base On $2,000 of lawn-mowing income, that’s roughly $283 in self-employment tax before any income tax. Half of the self-employment tax is deductible when calculating adjusted gross income, which softens the bill.
Clients or platforms that pay a teen $600 or more during the year will typically send a Form 1099-NEC. But the tax obligation exists whether or not a 1099 arrives. A teen who earns $500 from five different babysitting families won’t get a single 1099 and still owes self-employment tax on that $500. When freelance income gets significant, quarterly estimated payments using Form 1040-ES may be needed to avoid an underpayment penalty.9Internal Revenue Service. Estimated Taxes
Interest, Dividends, and the Kiddie Tax
Interest from savings accounts, dividends from stocks, and capital gains are all taxable for teens just as they are for adults. Teenagers face an extra layer on top: the kiddie tax. If a child’s unearned income exceeds $2,700, the excess is taxed at the parent’s marginal rate rather than the child’s lower rate.10Internal Revenue Service. Topic No. 553, Tax on a Child’s Investment and Other Unearned Income (Kiddie Tax) The rule exists to keep parents from shifting investment assets into a child’s name to grab the child’s lower bracket.
The kiddie tax applies to children under 18, children who are 18 and don’t earn enough to cover more than half their own support, and full-time students aged 19 through 23 who don’t meet that same support test.11Internal Revenue Service. Instructions for Form 8615 When it applies, the teen files Form 8615 with their return to calculate the tax at the parent’s rate. If a child’s only income is interest and dividends totaling less than $13,500, the parent can instead elect to report the child’s income directly on the parent’s own return using Form 8814.10Internal Revenue Service. Topic No. 553, Tax on a Child’s Investment and Other Unearned Income (Kiddie Tax)
Working for a Parent’s Business Is Different
Teenagers who work for a parent’s business get a payroll tax break. If the business is a sole proprietorship, or a partnership where both partners are the child’s parents, wages paid to a child under 18 are exempt from Social Security and Medicare taxes.12Internal Revenue Service. Tax Treatment for Family Members Working in the Family Business The child also avoids federal unemployment tax (FUTA) until age 21.13Internal Revenue Service. Family Employees
The exemption goes away when the business structure changes. If the parent operates through a corporation, or through a partnership where someone outside the family is a partner, the teen’s wages face the same FICA and FUTA as any other job. Income tax withholding always applies regardless of business structure. The FICA break doesn’t make the income tax-free.
Deadlines and Where To File Free
Federal returns are due April 15 of the year after the tax year. For 2026 income, the return is due April 15, 2027. Missing that deadline when tax is owed triggers two penalties: failure-to-file at 5% of the unpaid tax per month (up to 25%), and failure-to-pay at 0.5% per month on any balance due.14Internal Revenue Service. Failure to File Penalty If the teen is owed a refund, filing late carries no penalty, but there’s also no reason to wait.
Most teens qualify for free filing. The IRS Direct File tool is available to taxpayers with adjusted gross income of $89,000 or less, though state availability varies.15Internal Revenue Service. E-file: Do Your Taxes for Free Several commercial providers also offer free versions for simple returns through the IRS Free File program. A single W-2 and nothing else is one of the simplest returns possible.
Teens cannot file jointly with a parent. A dependent teen files their own separate return, checks the box indicating someone else can claim them, and the parent continues to claim the teen as a dependent on the parent’s return.
Turn Earned Income Into a Roth IRA
Any teen with earned income can contribute to a Roth IRA. The contribution limit for 2026 is the lesser of $7,500 or the teen’s total taxable compensation for the year.16Internal Revenue Service. Retirement Topics – IRA Contribution Limits A teen who earns $3,000 over the summer can put up to $3,000 in. Because most teens sit in a low or zero tax bracket, contributions go in at almost no tax cost, and future growth is tax-free in retirement.
Since minors can’t open brokerage accounts in their own name, a parent or guardian opens a custodial Roth IRA on the teen’s behalf. The teen must have legitimate earned income; investment income and allowances don’t count. The money used to fund the contribution doesn’t have to come from the teen’s own bank account. A parent can fund it as a gift, as long as the amount doesn’t exceed what the teen actually earned. Once the teen reaches the age of majority in their state, the custodial account converts to a standard Roth IRA in the teen’s name.
A few years of contributions during high school and college can grow substantially over decades. A teen who contributes $3,000 a year from ages 16 through 22 and never adds another dollar will still have a sizable retirement account by 65 from compounding alone. Filing that return and getting the earnings on the record is what makes it possible.