<p>Most kids don’t report their income for things like mowing the neighbors yard or occasional babysitting. My own kids have been filing since they were little but that’s because they worked with proper companies and got 1099’s or W-2’s. They never filed the 20 dollars the neighbor gave to feed the cats while he was gone twice a year. I’m not sure any of us even thought it about when tax time came… don’t think most familes would. Perhaps your step-dad is thinking of your work in that way… like a 10-year-old watering the plants for grandma for 10 bucks a month. Of course, you’ve made quite a bit (good for you) and he may not realized that. </p>
<p>Thank you everyone for your input! I’ve heard very mixed responses here. Based on the situation, I’m not sure how worth it is to go through all of that paperwork only for it to not matter a large amount. The “income” we are talking about here is a couple thousand a year, at best. I would understand reporting if I were a music teacher who has gone through years of education and experience and have 20+ students during a single week (which could easily total to about 20k a year), but since I only teach about seven students a week and am a high school student pursuing an interest. </p>
<p>In the grand scheme of things, I don’t believe it will make a huge difference. I appreciate those of you that were defending my step-father as well; it is not a matter of being misinformed, I’m sure it’s a matter of being uninformed. His primary duties do not deal with taxes and the IRS (to my understanding), and even if it did, it certainly wouldn’t deal with knowing bare minimums, since he usually works with customers that are salaried workers, not high school students making money from a type of self-employment. </p>
<p>Nonetheless, I appreciate the feedback. I feel as though the thread as drifted from the original idea, which had to do with how the savings is generally used for calculating aid. My goal is to not penalize my family and our ability to pay for my education solely because of an amount of money I have made through pursuing a passion. Thank you all for your input!</p>
<p>“The “income” we are talking about here is a couple thousand a year, at best.”</p>
<p>A couple thousand is serious income for a kid your age. Please do think about filing your taxes properly at least beginning with this year. After you take out what you can for expenses (Surely you have some expenses! Happykid includes all of her specialized work clothing and work mileage), and chuck some into a SEP-IRA, chances are that the taxes won’t be as horrible as you imagine right now. If you get into the habit now of filing your taxes correctly, you have less likelihood of messing them up seriously in the future.</p>
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<p>Why the quotes around the word income? Your students/clients obviously think that your experience is worth what they are paying, otherwise they wouldn’t be giving you their money in exchange for your services. The money that you receive for teaching piano is, without a doubt, earned income, and the amount that you earn as a self-employed piano teacher is, without a doubt, enough that you should be paying self-employment taxes on it. No amount of rationalizing on your part will change those facts.</p>
<p>" pretty much just collected the fees for the lessons" FEES = INCOME</p>
<p>You MUST fill out a tax return for this year and then use that tax filing on your FAFSA. Start doing the right thing now, and consider it part of your education on becoming an adult.</p>
<p>Again, you are not “penalizing” your family. Financial aid is for people who need it and do not have sufficient assets. If you have assets, be grateful for them and use them toward your education. That reported $1700 or so for a year’s income is not going to effect your financial aid award all that much, so just do the right thing.</p>
<p>It is your mother and stepfather’s income and assets that will have the most impact. And yes, you will have to report HIS income if they are married, to answer that question before it is asked.</p>
<p>OP’s other FA post:
"Hi everyone,</p>
<p>My friend told me about this technique he used when he was applying to colleges that I want to try. Basically, he applied to a college that he would be fine with attending, but there were others that he wanted to attend more but we’re more expensive. He used the first school (which have very good financial aid) to try and bring the cost down of his top schools by contacting financial aid offices.</p>
<p>I’m looking to do the same thing. But I’m having trouble finding a good school for it. Tulane was one that I thought of (only because they sent me an email to apply for free), but I noticed that their acceptance rate was 25%, which isn’t much of a safety-type school.</p>
<p>Does anyone have suggestions on schools I can apply to for this? I would prefer schools in the Midwest, if possible. Here are the other schools I am applying to:"</p>
<p>Sigh. Have you run any cost estimates through the schools you are considering to see what financial aid you might get or whether your family can afford to pay? </p>
<p>If you really need a lot of financial aid consider the University of Alabama. With your scores and stats you can get a full tuition scholarship. </p>
<p>If you plan to apply to Universoty of Alabama for scholarship admissions…get cracking. The application is due Decembet 1…do it tomorrow!</p>
<p>Agree with @happymom that you should consider at least filing a 2014 tax return. Especially as I noted if you will be referring to the rewarding experience of teaching piano lessons in your applications.</p>
<p>Over the years, you underpaid your self- employment tax by about $1000- even as an adult I don’t consider that a small amount.</p>
<p>I’d go with a ROTH if you want to save for retirement. Then it isn’t considered at all in EFC for FAFSA, or, a Coverdell or 529 plan at least.</p>
<p>First of all, I am not a tax expert, so you need to discuss your situation with one. However, a dependent on someone’s return, like a child, which you are does not have to file taxes if earned income is below a certain threshold. There are other issues if there is also unearned income involved. I don’t want to get into the exact rules. However, if it’s been over 4 years that you earned that $7k, it is not likely you needed to file taxes. How this works for social security/medicare, I do not know.</p>
<p>I can also guarantee you that hardly any kid I know who babysits occasionally, does odd jobs, dog walks, etc is filing and paying social security as an independent contractor, though the rules technically say they should since the exempt amount is miniscule. So don’t discount your step dad’s advice too quickly.</p>
<p>You are correct that if your money is sitting in an account in YOUR name on the day you file FAFSA or PROFILE, the amount is counted more heavily towards EFC (20% vs 5.6% for FAFSA, maybe more of a differential at some PROFILE schools) I suggest you repay your parents for your expenses and they can put the money in a joint acct with one of them named first, with SSN first. For 529s, FAFSA will count those owned by students the same as parental assets, but PROFILE schools often do not. So that may also be a consideration.</p>
<p>@cptofthehouse Thank you so much for your explanation! It’s always great to hear both sides to a situation. From what everyone is saying, I should consider looking into a 529 for money to go towards education. </p>
<p>Another piece of information that may be good to share: even if I do file taxes, I should mention that I will only be teaching for about eight more months. Once I go off to college, I will almost certainly be out of state and will be unable to continue my service. </p>
<p>If you put your money into a 529 YOU own, PROFILE schools might hit that up heavily. FAFSA does not, but some PROFILE schools do. </p>
<p>You are not likely to owe any taxes. You earned $7K over 4 years, which is less than $2K a year. You can earn up to $6200 a year before owing taxes if you don’t have other unearned income. You don’t even have to file. But Soc Sec and medicare are the issues, but i do not know how that is handled. I know most kids simply do not bother. And there are also independent contractor rules for chores, Kids who baby sit and mow lawns are viewed by the IRS as “household employees”. In these cases, a household employee who is younger than 18 at any time during the tax year the work was performed is not subject to Social Security and Medicare taxes.</p>
<p>The same exemption also is allowed for newspaper carriers, distributors or vendors younger than 18. The soc security maxes are truly archaic at $400 in earnings per year these days, and someone who just does some odd jobs can go over very quickly. It might be one of those unenforced rules for other kiddy work. </p>
<p>For financial aid, your earnings are not enough to to add to the FaFSA EFC. You can earn a little over $6K a year before the formula kicks in for student income. It’s 50% over that threshhold of ithing $6200, probably the tax threshhold, but maybe not—look it up, I don’t remember exactly. So you don’t need to explain it. A lot of kids earn money over the summers and school years You may be able to give lessons at college too, or accompany or play to earn some money. </p>
<p>Filing a tax return when required is not optional and is not based on materiality or likelihood of getting caught by the IRS or whether the next year (2015) income will only be earned for 8 months.</p>
<p>I don’t understand why the OP and other posters seem to believe this is optional. Perhaps people are confused over the income tax filing requirements versus the self-employment tax filing requirements. A person who earns under the threshold for income tax filing may still be required to file a tax return in order to pay self-employment tax.</p>
<p>Do the right thing. </p>
<p>Educate yourself.</p>
<p><a href=“http://www.irs.gov/pub/irs-pdf/f1040sce.pdf”>http://www.irs.gov/pub/irs-pdf/f1040sce.pdf</a></p>
<p>OP: just curious; have you mentioned teaching piano lessons in your college applications/essays?</p>
<p>The OP has a step dad who is in the business. S/he should discuss the rules with him. </p>
<p>There are some rules out there that just are not enforced. For example, you are supposed to pay sales tax in any number of states if you buy things OOS and not pay the tax. Buy an oriental rug in Delaware, no sales tax Supposed to report and pay. Buy something from Ebay, Etsy or whatever, no sales tax, you are supposed to report and pay. There is even a form for this But the state authorities put the onus on state sale tax collection on the sellers, not the buyers. Unless you run a business, and unless certain big ticket items are involved, most everyone doesn’t file and pay that tax.</p>
<p>In PA about 20 years ago there was an investment tax. So archaic, but yes, there. There was a big hooplah about it when some kid was paying it for years. Turned out he was practically the only one in the state paying it because it wasn’t enforced. They got rid of it, but did not reimburse those who paid it, did not go after anyone who did not.</p>
<p>So, yes, there are gray areas, and it often takes a tax expert to make the determination where one sits on those things. </p>
<p>Kids who baby sit, deliver newspapers, do lawn work are exempt for the social security/medicare tax, I know. I don’t know how the other jobs would fare, and what is enforced. The OP is fortunate to have someone in the business who can give his take on it, and the OP can then do his own research with head start from what step dad and those on this board have told him,</p>
<p>OP’s dad gave her incorrect information. This is not an occasional baby sitting or grass mowing. It is an established business that she has been doing for several years. The laws are pretty clear in the IRS documents.</p>
<p>For what it’s worth I pay taxes on the purchases I make out of state or via the internet. And my kids reported their babysitting income - part of growing up and getting any job is learning to do things the right way and take on responsibilities.</p>