I am a senior in high school and will be graduating at 18 years of age. This summer I already have jobs lined up to work in peoples yards and to babysit. Is there a cap to how much income can be made within one year until it is needed to be reported in my taxes? Also, Is there a cap to my income that I have to create a business for the summer to due those taxes legally? Thank You for your time!
Check IRS.gov. There are answers to questions such as yours available there.
This answer is for discussion purposes only and will not be considered legal advice. Further, a court could potentially decide the question contrary to my answer.
If you make less than $400, you are not subject to self-employement tax. In general, you can make more than that and not be subject to income taxes. . Even a dependent gets a standard deduction (for 2011) of $950.
Please recognize that information provided here is for education and informational purposes and is not intended to provide individual legal advice. You should seek you own counsel to determine the applicability to your own situation. IRS CIRCULAR 230 DISCLOSURE REQUIREMENT: IRS Circular 230 requires us to notify you that any tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding tax penalties that may be imposed by law.
There are usually exclusions under state law if you just make a small amount of income. However, for federal purposes, all income is income. If you have more than $400 in self employment income, or roughly $9500 of wages, you have a duty to file.
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