Thursday, June 25, 2009


My daughter has a summer job. At the end of the year she never owes any tax but has to file a return to get her money back. Is there anything that we can do to avoid her having to file?


Your daughter can escape federal income tax withholding from her paychecks if she did not owe any tax last year and does not expect to owe any this year.

Students who can be claimed as dependents can avoid income tax withholding if their unearned income (interest) is $300 or less and their total income won’t exceed $5,700. If their investment income is more than $300, total income cannot top $950.

As a reminder, hiring your children can save tax as well. No Social Security tax is due when sole proprietors or husband-wife partnerships hire their under-age-18 kids. In addition, federal unemployment tax isn’t owed on the kids’ pay until they reach 21. You still need to do a W-2 for the child.

Larry Kopsa CPA