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Does Your Teen Need to File a Tax Return?

Does Your Teen Need to File a Tax Return?

Dear Carrie: My daughter is 16 and has her first paying job. Does she need to file a separate tax return? — A Reader

Dear Reader: Congratulations to your daughter — and to you. A first job is an important milestone for both kids and parents. It’s a step toward independence and personal responsibility for your daughter. And it’s an opportunity for you to teach her some financial realities.

Taxes are definitely a part of that financial reality. So I’ll first discuss the parameters for filing a tax return. Then I’d like to get into ways you can help your daughter learn to manage her money wisely — which, to me, is the most important lesson of all.

Basic Guidelines for Filing a Teen’s Tax Return

Whether or not your daughter needs to file a separate tax return depends on three basic factors:

–Is she considered a dependent by the IRS?

–How much income does she have?

–What type of income does she have?

The IRS considers a child to be a dependent if he or she:

–Is under 19, or under age 24 and a full-time student, or permanently disabled at any age;

–Lives with you more than 50 percent of the year

–Doesn’t provide more than half of his or her own financial support.

Next, you need to look at her income, both the amount and type.  Here’s where it gets more complicated, because there are different rules and income limits for earned income from a job, unearned income from dividends, interest or investment gains — or a combination of both

For Earned Income Only

This is pretty straightforward. A dependent who doesn’t have unearned income only has to file a separate tax return if earned income is above the standard deduction — $6,300 for 2015. So if your daughter earned less than that, she wouldn’t have to file.

But it could be a good idea to do it anyway. If her employer withheld federal income tax, she might be entitled to a refund. You don’t want her to miss out on that. Plus, it’s a good learning experience.

For Unearned Income Only

Unearned income is a different story. If a child has unearned income above $1,050 for 2015, a tax return is required. But when dealing with unearned income only, you can choose to either file a separate return for your child or include that income on your own return. One caveat: If you include it on your return, it could boost you into a higher tax bracket — and possibly higher tax rates.

For a Combination of Both

The rules change again if a dependent has both earned and unearned income.

In this case, you need to file a separate return if:

–Unearned income is more than $1,050.

–Earned income is more than $6,300.

–Combined income totals more than the larger of $1,050 or earned income (up to $5,950) plus $350.

To make this a little clearer, let’s say your daughter had $100 in interest income plus $5,000 in earned income. She wouldn’t have to file a return because both her unearned and earned incomes are below the thresholds and her total income of $5,100 is less than $5,350 (earned income plus $350). However, if she had $400 in interest income, she would have to file because her total income of $5,400 would be more than her earned income plus $350.

Now let’s say your daughter had $400 in earned income and $800 in interest income. In this case, she would have to file a return because her total income of $1200 is more than $1050.

All this can be a bit confusing, so unless your daughter’s situation is fairly straightforward, I’d talk to your tax professional. Also check out IRS Publication 929 for a thorough treatment and worksheet.

A Word on the “Kiddie Tax”

You may have heard of the Kiddie Tax, so I think that’s also worth a mention. This has to do with tax rates on unearned income.

For 2015, your child’s unearned income less than $1,050 is not taxed. Unearned income between $1,050 and $2,100 is taxed at his or her rate. Unearned income above $2,100 is taxed at the parent’s highest income tax rate. If your child has a lot of unearned income, that could be pretty significant.

Going Beyond Taxes

Whether or not your daughter files a return, I’d definitely talk to her about taxes and withholding, and have her work with you as you prepare either hers or your own return.

Then take it beyond taxes and talk about responsible money management. Now that your daughter is earning her own money, help her create a budget so she can make the most of it. For instance, what do you expect her to pay for? Clothes? Entertainment? Gas? Have her keep track of her expenses monthly (an online budget calculator can help).

Suggest that she save a certain percentage of her paycheck each month for some future goal. If she hasn’t done so already, help her open both checking and savings accounts and set up an automatic deposit from one to the other. Now that she has earned income, you might even help her open a Roth IRA.

Establishing good money habits early is incredibly important but, in general, kids don’t learn much about managing money in school. It’s up to you. So show her how you manage for both the short- and long-term. If you take it step-by-step, and include her where appropriate in your own money strategies, you’ll set her on the path to being able to not only handle her taxes, but her financial future, as well.

Carrie Schwab-Pomerantz, CERTIFIED FINANCIAL PLANNER(tm), is president of Charles Schwab Foundation and author of The Charles Schwab Guide to Finances After Fifty, available in bookstores nationwide. Read more at http://schwab.com/book. You can e-mail Carrie at askcarrie@schwab.com. This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

COPYRIGHT 2015 CHARLES SCHWAB & CO., INC. MEMBER SIPC.

DIST BY CREATORS SYNDICATE, INC. (0216-0833)

Photo: Flickr user Cliff. 

Prince Charles Meets Sinn Fein’s Adams In ‘Significant Step’

Prince Charles Meets Sinn Fein’s Adams In ‘Significant Step’

By Fiona Smith, dpa (TNS)

DUBLIN — Britain’s Prince Charles and Gerry Adams, leader of the nationalist party Sinn Fein, shook hands Tuesday in a landmark meeting at the start of the prince’s four-day visit to Ireland.

Adams and another senior Sinn Fein leader, Martin McGuinness, were among a number of politicians to greet the prince at the National University of Ireland Galway.

The meeting was the first of its kind in the Republic of Ireland between the Sinn Fein leadership and a member of the British royal family.

Prince Charles and Adams smiled at each other, shook hands for a few seconds and exchanged brief remarks.

Adams said the meeting was “a significant symbolic and practical step forward in the process of healing and reconciliation.”

“All victims, including those bereaved by the IRA (Irish Republican Army), deserve justice, and it is crucial that the process of healing and of reconciliation is enhanced and strengthened,” he said.

“I hope today’s meeting will assist this and that the governments and political parties will build on this opportunity,” Adams said.

Sinn Fein, considered to be the political wing of the IRA, had at one time objected to meeting members of the royal family because of their links to Britain’s armed forces.

Charles’ office, Clarence House, said he and Adams also held a ten-minute meeting in a private room with McGuinness and Dominick Chilcott, Britain’s ambassador to Ireland, in attendance.

“His royal highness agreed to the meeting after a request by the Sinn Fein president (Adams),” Clarence House said.

In a speech at the university, Charles paid tribute to his hosts.

“I am so overwhelmed and deeply touched by the extraordinary kindness, the welcome, the enthusiasm, indeed the fun of being in Ireland,” he said.

Northern Ireland was rent by conflict for 38 years, in which Catholic nationalists sought a united Ireland and Protestant Unionists sought to remain in the United Kingdom. The Troubles were brought to a close in 2007 through a peace process that led to power-sharing in the province.

In 2012, McGuinness shook hands with Queen Elizabeth at a function in Belfast’s Lyric Theatre in Northern Ireland in his capacity as the region’s deputy first minister.

The previous year, Sinn Fein declined to let McGuinness accept an invitation to a state banquet at Dublin Castle during the queen’s historic visit to Ireland.

On Wednesday, her son Charles, accompanied by his wife, Camilla, the duchess of Cornwall, is scheduled to visit the village of Mullaghmore in County Sligo where his great-uncle Earl Mountbatten was killed by an IRA bomb in 1979.

Later Tuesday, the prince was to visit the Marine Institute at University College Galway and the Burren, a karst landscape in County Clare known for its natural beauty.

The couple are then due to attend a private dinner with President Michael Higgins and his wife, Sabina at Lough Cutra, in County Galway.

Security is expected to remain tight throughout the visit with road closures and restricted access to all locations.

Charles is colonel-in-chief of the Parachute Regiment, which was responsible for the deaths of civilians during “Bloody Sunday,” a demonstration in 1972 in Derry, Northern Ireland.

British Prime Minister David Cameron has apologized for the events of Bloody Sunday after the Savile report found British soldiers fired on unarmed civilians, killing 13, at a protest against internment without trial.

Photo: Adam Gerrard via Daily Mirror/PA Wire/Abaca Press/TNS

Gerry Adams Held Over Notorious IRA Murder

Gerry Adams Held Over Notorious IRA Murder

Antrim (United Kingdom) (AFP) – Northern Ireland police on Thursday questioned Sinn Fein president Gerry Adams, a chief negotiator in the Irish peace process, over the notorious IRA murder of a woman suspected of being an informant in 1972.

The 65-year-old republican leader was arrested on Wednesday night over the killing of mother-of-ten Jean McConville after voluntarily attending a police station in Antrim, Northern Ireland, for an interview.

Adams strongly rejected any involvement in the murder — one of the most infamous incidents in Northern Ireland’s violent history — saying in a statement that the allegations were “malicious.”

“While I have never disassociated myself from the IRA and I never will, I am innocent of any part in the abduction, killing or burial of Mrs. McConville,” he said.

Sinn Fein was once the political arm of the Irish Republican Army (IRA) paramilitary group, which waged a bloody campaign over three decades for British-controlled Northern Ireland to become part of Ireland.

The party now shares power with the pro-British Democratic Unionist Party (DUP) in the devolved government in Belfast. It is also represented in the Irish parliament in Dublin.

Sinn Fein deputy leader Mary Lou McDonald said Adams’s arrest was “politically motivated,” as it came three weeks ahead of local and European Parliament elections.

McConville, a 37-year-old widow with ten children, was snatched from her home in west Belfast, becoming one of more than a dozen so-called “disappeared” of the conflict.

The IRA accused her of being an informer for the British army, although a police watchdog later found no evidence to support the claim.

The IRA admitted her murder in 1999 and four years later her remains were found on a beach in County Louth. She had been shot in the back of the head.

McConville’s son Michael, who was 11 years old when he saw his mother dragged away, said he was pleased that the police were “doing their job.”

However, he admitted in a BBC interview that he still refused to name the people he saw taking his mother, saying he still feared reprisals.

“If I told the police a thing either me or one of my family members or one of my children would get shot by these people,” he said.

“Everybody thinks this has all gone away — it hasn’t gone away.”

Nobody has ever been found guilty of McConville’s murder, but former IRA leader Ivor Bell, 77, was last month charged with aiding and abetting those involved.

Five others in addition to Adams have also been questioned.

Detectives are using evidence given to researchers at Boston College in the United States, who interviewed a number of former paramilitaries.

The interviewees were told the transcripts would not be published until after their deaths, but a U.S. court last year ordered that the tapes should be handed over to police.

Former IRA commander Brendan Hughes and convicted IRA bomber Delours Price, now dead, both alleged Adams was involved in McConville’s death.

But Adams, a former member of the British parliament who was elected an Irish MP in 2011, has strongly rejected the claims.

“I believe that the killing of Jean McConville and the secret burial of her body was wrong and a grievous injustice to her and her family,” he said.

“Well publicised, malicious allegations have been made against me. I reject these.”

Adams, who has led Sinn Fein since 1983, says he was never an official IRA member, but he played a key role in ending its armed struggle.

He became involved in the 1960s Catholic civil rights movement seeking to end discrimination by the Protestant majority, and was detained several times in the 1970s.

For many in Britain he remains a controversial figure, but he won respect for his key role in the 1998 Good Friday peace accords, and for helping persuade the IRA to renounce violence in 2005.

Adams stayed out of the power-sharing government established under the peace deal, and in recent years has taken on the role of elder statesman.

But the spotlight swung back on his family last year when his brother, Liam Adams, was jailed for raping his own daughter in the late 1970s and early 1980s.

©afp.com / Carl Court