Actually that $12,950 figure is outdated. For 2025 the filing threshold for dependents with earned income is estimated to be around $13,850 due to inflation adjustments. But you're right about the general point - many teen workers won't hit the filing requirement.

Thanks for the correction! You're right that the numbers adjust each year with inflation. The important thing for the original poster to understand is that there's a threshold below which filing isn't required, but that doesn't change the need to complete the W4 accurately for employer withholding purposes.

I tried using it but got super confused by all the questions. Maybe I'm not tech savvy enough but it seemed to assume I knew a lot of tax terminology already. Ended up just taking my best guess on the W4.

Yes! I've been self-employed for years. The basic rule is if you expect to owe $1,000+ in taxes, you should make quarterly payments. Use Form 1040-ES to calculate. The easiest method is to take your total expected tax for the year, divide by 4, and pay each quarter. Due dates are April 15, June 15, Sept 15, and Jan 15 of the following year. I personally set aside 30% of all my freelance income in a separate savings account to cover both income tax and self-employment tax (15.3% for Social Security/Medicare). That way I'm never caught short when payments are due!

Thanks so much! I didn't realize the cutoff was only $1,000 - I'll definitely hit that. Is there a penalty if I miss the first quarter payment but make the rest on time? I'm just learning about all this now. I love the idea of setting aside 30% in a separate account - that makes so much sense. Will definitely be doing that going forward. Do you use any specific software or just calculate it manually with the 1040-ES?

Extensions only give you more time to FILE, not more time to PAY. So you still need to estimate and pay what you think you'll owe by the regular April deadline, or you'll face penalties and interest. I file extensions most years because I have some investments that don't get their paperwork out until late March, and it's super easy. Just file Form 4868 - can do it online through IRS Free File or most tax software. It gives you until October 15 to file the actual return.

Thanks for the mileage tip! Does that work if I'm driving to these coffee shops where I do my contract work? Also, I'm on my parents' health insurance still (I'm 24) - does that disqualify me from any health insurance deductions?

Driving to coffee shops can be deductible if they're not considered your principal place of business. If you primarily work from your home office and occasionally go to coffee shops for a change of scene or specific tasks, those trips might qualify as business travel. Keep a detailed log of these trips including date, starting point, destination, purpose, and miles driven. Regarding health insurance, since you're covered under your parents' plan and not paying the premiums yourself, you wouldn't be eligible for the self-employed health insurance deduction. That deduction is specifically for self-employed individuals who pay for their own health insurance policies.

This is such a weird and unhelpful comment. OP asked specifically about deductions, not business growth advice. Why not just answer the question that was asked instead of changing the subject?

This is his first year of college directly after high school, so we're good on the 4-year limit. Is there anything else I should know about income limits? We make around $95k combined if that matters.

You should be fine with the income limit at $95k combined. The AOTC begins to phase out for modified adjusted gross income (MAGI) above $160,000 for married filing jointly and $80,000 for single filers. Since you're below those thresholds, you should be eligible for the full credit amount. Another thing to remember is to keep good records of all qualified education expenses paid. Make sure you have receipts for tuition, required fees, and course materials like textbooks. Also, expect to receive a Form 1098-T from the college which will help substantiate your claim for the credit.

That's not quite right. The student doesn't need earned income to qualify for AOTC. The requirement is that whoever claims the credit (either the student or the parent) must have a tax liability or the credit is refundable up to 40%. If the parent claims the student as a dependent, the parent claims the credit regardless of who paid the expenses.

Oh that's really helpful! Summit is actually an LLC, but I don't know how they're taxed. So I definitely need that W-9 to determine whether they're taxed as a partnership or a corporation before I figure out the 1099 situation?

That's exactly right. The W-9 will indicate how they're taxed. If their LLC is taxed as a partnership or single-member LLC (disregarded entity), you'll need to issue the 1099-NEC. If they're taxed as an S-Corp or C-Corp, then you generally don't need to issue the 1099. This is why it's best practice to get W-9s from all vendors when you first start doing business with them, so you know from the beginning whether you'll need to track their payments for 1099 purposes. In your case, definitely request their W-9 now so you're prepared when tax time comes around.

I used TurboTax Self-Employed last year to handle 1099s for my business, including some referral fees similar to what you're describing. It does walk you through the process, but you need to have all your information organized beforehand. Make sure you have the W-9s collected and total payment amounts calculated per vendor before you start. The system will guide you through creating and filing the 1099-NECs, but it's not as intuitive as it could be for percentage-based payments that accumulated throughout the year. I ended up creating a separate spreadsheet to track all my commission payments to make sure the totals were accurate.