My 17-year-old son worked as a lifeguard this summer at our local swimming pool. Does he need to file a tax return next April?
It depends on how much he earned on the job and how much he earns from any other investments in 2009.
Kids who are claimed as dependents on their parents' returns must file a tax return if they earn more than $5,700 from a job in 2009. If your son earned less than that, he still may be required to file a return if he earns more than $300 for the year from any investments in his name, such as from a bank account, mutual fund or custodial account. (Dependent children who don’t have jobs have to file if their investment income is more than $950 in 2009.) For more information about the tax-filing rules for children, as well as details about which forms to submit, see IRS Publication 929, Tax Rules for Children and Dependents.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Even if your son isn't required to file a tax return, he might want to do so anyway to get back any income taxes that his employer withheld. He won't be able to get back any wages that were withheld for Social Security taxes, but the work he did counts toward his future Social Security eligibility.
And because he had a job, he can take advantage of a valuable tool to help him save for the future. Because your son has earned income -- regardless of whether he has to file a tax return -- he can open a Roth IRA, which can give him a huge head start on retirement savings. The maximum IRA investment in 2009 is $5,000 for anyone younger than 50 (it's $6,000 for people who are 50 or older), but he can't contribute more to the IRA than the amount of money he earned from a job during the year. If he earned $4,000 over the summer, for example, he can invest up to $4,000 in a Roth IRA.
Few kids want to invest all their summer earnings in an account they won't tap for years, but you can give him the money to make the contribution or offer to match his contributions dollar for dollar (as long as the total contributions to his account for 2009 don't exceed the amount of money he earned for the year or $5,000, whichever is lower).
And the money can grow substantially over the years: If the investments earn 6% per year (a conservative average over the long run), just that one $4,000 investment could grow to more than $73,000 by the time today's 17-year-old reaches age 67. He can withdraw the contributions tax- and penalty-free at any time, and he can take the earnings tax-free after age 59½. If he gets started in the saving habit and invests $4,000 every year until retirement, then he could amass an account worth about $1.3 million by the time he's 67, assuming 6% annual returns.
See Roth Rules for Kids and Why You Need a Roth IRA for more information.
-
Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap.
-
Selling Your Haunted House? What You Have to Tell Buyers (and What You Don’t)You don’t need ghosts to spook buyers, sometimes a home’s past is enough. Here’s what sellers should know about disclosure laws, pricing and perception when a property has a haunted history.
-
Three Critical Tax Changes Could Boost Your Paycheck in 2026Tax Tips The IRS predicts these tax breaks may change take-home pay in 2026. Will you get over $1,000 in tax savings?
-
RMDs, Roth, and SS: Test Your Knowledge of Retirement Tax RulesQuiz Don't let the IRS catch you off guard. Take our quiz to reveal common retirement tax rules that could save (or cost) you thousands.
-
IRS Reveals New 2026 Child Tax Credit and other Family Credit AmountsTax Credits Key family tax breaks are higher for 2026, including the Earned Income Tax Credit and the Adoption Credit. Here's what they're worth.
-
Claiming the Standard Deduction? Here Are Five Tax Breaks for Retirement in 2025Tax Tips If you’re retired and filing taxes, these five tax credits and deductions could provide thousands in relief (if you qualify).
-
IRS Names Its First CEO: But He’s Also Still Running Social SecurityTax News Will this new role make it difficult to address emerging issues like budget and staffing cuts and customer service concerns?
-
Three Popular Tax Breaks Are Gone for Good in 2026Tax Breaks Here's a list of federal tax deductions and credits that you can't claim in the 2026 tax year. High-income earners could also get hit by a 'surprise' tax bill.
-
IRS Phasing Out Paper Checks: What Happens After September 30?Tax Changes Avoid delays when IRS tax refunds and Social Security paper checks are cut off. Here’s what to know.
-
Ask the Editor, September 12: Tax Questions on 529 Plan Rollovers to a Roth IRAAsk the Editor In this week's Ask the Editor Q&A, we answer four questions from readers on transferring 529 plan money to a Roth IRA.
