Your teenager's first job: filing, withholding and claiming exempt

A teenager who can be claimed as a dependent files on a different set of thresholds from everyone else. Below them nothing is required, but filing anyway is usually how the withheld tax comes back.

The thresholds for a dependent

Publication 501 gives a dependent three tests, and a return is required if any one of them is met. A single dependent who is neither sixty-five nor blind must file if unearned income — taxable interest, ordinary dividends and capital gain distributions — came to more than $1,350. Or if earned income, meaning wages, tips and the like, came to more than $15,750. Or if gross income, the two added together, came to more than the larger of that first floor or their earned income up to a cap plus a small add-on.

For a teenager with a summer job and no investments, the second test is the one that decides it, and it is why most first jobs produce no filing requirement at all. The first test is worth reading if a grandparent has opened a brokerage account: unearned income above that floor creates a filing requirement on its own, and above a further threshold the tax on a child's investment income is figured differently from an adult's. That second rule is a subject of its own and is not attempted here.

Working does not end the dependency

This is the question parents actually ask. A job does not by itself stop you claiming your child. The qualifying child tests turn on relationship, age, residence and support, and none of them asks whether the child earns money. A teenager can hold a job, file their own return and still be your dependent in the same year, as long as those tests are met.

Claiming dependents sets out the tests in full, including the support test, which is the one a high-earning teenager can eventually affect.

File anyway if tax was withheld

Here is where the money is. If the employer withheld federal income tax and the teenager turns out to owe none, the only way to get that money back is to file a return. No filing, no refund. It is often the whole of the withholding, and for a summer job it can be a meaningful amount to someone earning at that level.

Filing it costs nothing if you use one of the free routes; free ways to file and choosing a preparer covers which ones a teenager qualifies for.

The W-4 the teenager signs

A first W-4 is short. Step 1 is name, address, taxpayer identification number and filing status, usually single. For one job and no other income, the instruction on the form is to complete Steps 2 through 4 only if they apply, and for most teenagers they do not, so the form goes straight to Step 5 and the signature.

A second job changes that. Two employers each withholding as though theirs is the only paycheck will together withhold too little, and Step 2 is the part of the form that fixes it. Form W-4, line by line walks through what each step is asking. If you fill the form in for your teenager, check whether the word Exempt has been written in the space below Step 4(c) before you sign anything.

Claiming exempt: the two conditions

Exempt means no federal income tax is withheld at all. It is available only if both of two things are true: you had no federal income tax liability last year, and you expect to have none this year. Having no liability last year means your total tax was zero, or you were not required to file because your income was below the filing threshold for your status.

A teenager who worked a little last year and got everything back may genuinely meet both. A teenager who will earn more than the standard deduction this year does not meet the second, and claiming exempt anyway means no withholding, tax owed at filing time, and possibly penalties on top. An exempt claim also has to be renewed: a new Form W-4 is due by February 16, 2027 to keep it running for 2027.

Self-employment is a different floor

Babysitting, lawn work, tutoring, reselling and app work are usually not employment at all. Work that is paid directly and never runs through a payroll is generally self-employment, and self-employment tax starts at a much lower level than income tax does. Once net earnings from self-employment reach $400, self-employment tax at 15.3% is due, and a return is required to report it.

So a teenager with a few hundred dollars of app income can owe tax where a teenager with the same amount in wages owes nothing. Income from that work is reportable whether it arrived in cash, by transfer or through a platform, and whether or not any form was issued. Schedule C is where the income and the costs of doing the work go, and Form 1099-NEC covers the form a platform or client may send. Casual work at the edges of this is worth a preparer's opinion rather than a guess.

What a parent should actually do in September

Look at the W-4 your teenager signed and check whether Exempt was written below Step 4(c). Keep the pay stubs, and note separately anything that was paid without a payroll behind it. Then put a reminder in January to file, even where nothing is owed, because that is how withheld money comes home.