Do Minors Get Taxes Taken Out of Their Paycheck?

Many minors enter the workforce each year, earning income through various jobs. A common question arises for these young workers and their families: do taxes get taken out of a minor’s paycheck? The answer is not a straightforward yes or no; it depends on several factors, including the minor’s income level and the specific type of tax involved. Understanding these nuances helps ensure compliance with tax regulations.

Understanding General Payroll Tax Withholding

Payroll taxes are amounts employers withhold from an employee’s wages and remit to the government. These taxes fund various federal programs and typically include Federal Income Tax, Social Security Tax, and Medicare Tax.

Employers withhold Federal Income Tax based on information provided by the employee on Form W-4, the Employee’s Withholding Certificate. This form helps determine the appropriate amount of federal income tax to be withheld from each paycheck, aiming to align withholding with their estimated tax liability.

Social Security and Medicare taxes, collectively known as Federal Insurance Contributions Act (FICA) taxes, fund retirement, disability, and healthcare benefits. For 2024, the Social Security tax rate is 6.2% on wages up to an annual limit of $168,600, while the Medicare tax rate is 1.45% on all wages, with no income limit. Employers and employees each pay half of these FICA taxes, meaning employees generally see a combined 7.65% deducted from their gross pay for these purposes.

How Minor Status Affects Withholding

While there is no specific “minor tax” or blanket exemption, the general tax rules can apply differently to minors due to their typical income levels and dependency status. This often results in a reduced or even zero federal income tax withholding for many young workers.

For federal income tax purposes, most working minors are considered dependents of another taxpayer. Dependents have a limited standard deduction, which for 2024, is the greater of $1,300 or their earned income plus $450, up to $14,600. If a minor’s total earned income falls below this dependent standard deduction amount, they generally will not owe federal income tax.

Regarding FICA taxes, minors are generally not exempt from Social Security and Medicare taxes, regardless of their age or income level. These taxes are typically withheld from a minor’s wages just as they are for adult employees. A limited exception exists for children under age 18 who are employed by a parent in an unincorporated trade or business.

State and local income taxes may also apply to a minor’s wages. These tax rules vary significantly by jurisdiction. Depending on where the minor lives and works, state or local income taxes could be withheld from their paychecks in addition to federal taxes.

Completing the W-4 Form to Control Withholding

The Form W-4, Employee’s Withholding Certificate, is a necessary document for minors, or their parents or guardians, to ensure appropriate federal income tax withholding. This form allows employees to communicate their tax situation to their employer, influencing how much federal income tax is deducted from each paycheck. Correctly completing the W-4 helps prevent over-withholding or under-withholding.

If a minor expects to have no federal income tax liability for the year, they may claim “exempt” from federal income tax withholding on their W-4. This often applies if their earned income is expected to be below the standard deduction amount for dependents.

To claim “exempt,” the minor should complete Step 1 and Step 5 of Form W-4, writing “Exempt” in the space below Step 4(c). The remaining sections should be left blank. Claiming “exempt” only applies to federal income tax withholding; Social Security and Medicare taxes will still be withheld unless a specific FICA exemption applies. An “exempt” W-4 form is valid only for the calendar year in which it is filed and must be resubmitted annually by February 15th.

Tax Filing Obligations for Minors

Minors may still be required or benefit from filing a federal income tax return, even if taxes are not withheld from their paycheck. The obligation to file primarily depends on the amount and type of income the minor receives.

For 2024, a minor claimed as a dependent must file a tax return if their earned income exceeds $14,600. If they have unearned income, such as from investments, they must file if this income is more than $1,300. If a minor has both earned and unearned income, filing is required if their gross income exceeds the larger of $1,300 or their earned income plus $450.

Even when not required to file, a minor should consider filing a tax return if federal income tax was withheld from their paycheck. Filing a return is the only way to receive a refund for any federal income tax that was over-withheld.

The “kiddie tax” rule is a specific consideration for minors, though it primarily impacts unearned income, not wages from a job. This rule applies to children under age 18, or certain full-time students aged 18 to 23, who have unearned income above a certain threshold. For 2024, if a child’s unearned income exceeds $2,600, the portion above this amount is generally taxed at the parent’s marginal tax rate, which is typically higher than the child’s rate. The first $1,300 of unearned income is tax-free, and the next $1,300 is taxed at the child’s rate. The kiddie tax generally does not apply to earned income from employment.