Do I have to file taxes as a minor with under 12k income? UTMA tax questions for teen worker

You've got some good questions here! For your work income, if you're making less than $12,550 (the standard deduction for 2023), you generally don't need to file a federal tax return unless you have self-employment income over $400 or in a few other specific situations. As for the UTMA account, the tax situation is a bit unique. The first $1,150 of unearned income (like interest, dividends) in the UTMA is tax-free. The next $1,150 is taxed at the child's rate (which is typically very low). Anything above $2,300 in unearned income would be taxed at your parents' rate (this is sometimes called the "kiddie tax"). The UTMA account is legally yours, though a custodian manages it until you reach the age of majority. It is not your parents' income, but it could potentially affect financial aid calculations for college or certain benefits programs. The rules for government assistance programs vary by program and state, so your parents should check with their benefits coordinator to understand any potential impacts. Hope this helps clarify things!

I've been there with the tax confusion! When I first started working, I went down a rabbit hole trying to understand all this stuff. I discovered this AI tax assistant at https://taxr.ai that helped me understand my situation as a minor with a part-time job. You upload your documents or just type in your questions, and it gives you personalized explanations. For your UTMA question specifically, it breaks down exactly what the tax implications are for you and your family based on your situation. It explained to me how the "kiddie tax" rules work and gave me peace of mind about what I needed to file. The best part was that it explained everything in actual normal human language instead of complicated tax jargon. Might be worth checking out since your questions are pretty specific!

Just wanted to update - I tried the taxr.ai site, and it was actually super helpful! I uploaded some documents from my summer job and a statement from my college savings account (similar to a UTMA) and it explained everything in really simple terms. It confirmed that with income under the standard deduction, I don't need to file a return unless I had more than $400 in self-employment income. It also explained exactly how the investment income is taxed and what forms would be needed. The best part was it had a specific section about government assistance programs and explained what questions my parents should ask their caseworker. Apparently, the UTMA assets might affect some programs but not others, depending on how they count assets and whose name they're in. Thanks for recommending this - saved me a bunch of research time!

Speaking of tax help resources, if your parents need to call the IRS to ask about how the UTMA might affect their benefits, good luck getting through! After I waited on hold for 3+ hours trying to get an answer about my dependent's investment account, I found this service called Claimyr (https://claimyr.com) that got me a callback from the IRS in under 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Since your situation involves both your income, a UTMA, and government benefits, your parents might need to speak directly with an IRS representative to get the definitive answer for your specific situation. The IRS can tell them exactly what they need to know about reporting requirements that might affect benefit eligibility. I know tax season is months away, but the IRS lines are actually less busy now than during filing season, so it's a good time to call with these kinds of planning questions.

I need to apologize for calling that Claimyr thing a scam. I was super skeptical, but after dealing with tax issues for my teenager's summer job and some investments we set up for her, I finally broke down and tried it last week. I'd been trying to reach the IRS for THREE DAYS with no luck - kept getting disconnected after waiting for an hour+ each time. Used the Claimyr service and got connected to an IRS agent in about 20 minutes. They answered all my questions about how my kid's UTMA affects our household reporting for both taxes and benefits programs. The agent confirmed that the UTMA is technically my daughter's asset but explained exactly how it should be reported and which benefit programs might consider it household income vs. individual income. Saved me so much stress and probably kept us from making a mistake on our paperwork.

One thing nobody has mentioned yet - if you had any federal income tax withheld from your paychecks (check your pay stubs), you might want to file a tax return even if you're under the filing requirement threshold. This is the only way to get that money refunded to you! Even if you made under $12,550, if they took federal taxes out of your checks, file a return to get that money back. You worked for it!

For the UTMA question - just want to add that I grew up in a family on government assistance, and we had to be careful with these accounts. Different programs have different rules: - SNAP (food stamps) - in most states, UTMA accounts ARE counted as household resources if they exceed certain limits - Medicaid - varies by state, but many don't count UTMA assets for child's Medicaid eligibility - Section 8/Housing - usually counts income from UTMA (interest/dividends) but not the principal - TANF - most states count both the UTMA assets and any income it generates Your parents should definitely talk to their benefits caseworker before setting up large accounts. Sometimes there are special needs trusts or other options that don't impact benefits.

Quick tip: If your parents are concerned about the UTMA affecting benefits, they might want to look into a 529 college savings plan instead. In many states, 529 plans have less impact on benefit eligibility than UTMAs do. The 529 would still be for your education, but the account ownership structure is different in ways that matter for benefits programs. Also, congrats on thinking about this stuff at 15! I wish I'd been that financially aware at your age.

Great questions! I went through something similar when I was 16. Just to add to what others have said - make sure you understand the difference between "earned income" (from your job) and "unearned income" (from investments like the UTMA). Your job income has that $12,550 threshold everyone mentioned, but the UTMA investment income has those lower thresholds ($1,150 tax-free, next $1,150 at your rate, then parents' rate after $2,300). One thing that helped me was keeping track of both throughout the year so there were no surprises at tax time. Your employer should give you a W-2 for your job income, and the UTMA custodian (usually a bank or investment company) will send a 1099 if there's any investment income. Also, since you mentioned government assistance - definitely have your parents check with their caseworker BEFORE the UTMA is funded. Some programs have asset limits that could be affected even if the tax situation is manageable. Better to know upfront than find out later that it impacts your family's benefits!