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I have two 15 year old children that entered the work force last year.
They received W-2 wage summaries for 2012:

One earned $222.93
The other earned $1580

a small amount of federal tax was withheld from each.

I'm thinking of filling out the 1040EZ tax return for each of them.


Is this the correct approach? (seems too easy)

Also, will these wages impact me and my wifes joint return?

I know that they will eventually become too old for me to claim, just not sure how their wages might factor in on my return.
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I have two 15 year old children that entered the work force last year.
They received W-2 wage summaries for 2012:

One earned $222.93
The other earned $1580

a small amount of federal tax was withheld from each.

I'm thinking of filling out the 1040EZ tax return for each of them.


Is this the correct approach? (seems too easy)

Also, will these wages impact me and my wifes joint return?

I know that they will eventually become too old for me to claim, just not sure how their wages might factor in on my return.


Yes, if you want to recover the withheld tax for them, they will file a 1040EZ. This doesn't affect your tax return as long as you remember to NOT claim a personal exemption on the 1040EZ returns. The children's exemptions are claimed on your return.

Ira
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follow up to my own question...

From the IRS site, it states that 1040EZ may be used as long as taxable income is less than $100,000.

But there is also a line that tips must be included in boxes 5 and 7 of Form W-2.

Looking over their W-2's I see nothing indicating if Tips are or are not included. There is however a Box 8 for "Allocated tips", but that is blank in all cases.

One of their jobs is working in a restaurant, but as I understand it Tips are shared among the staff and they don't personally pocket them.


So, still thinking that 1040EZ is appropriate for children in most situations and that an employer that fills in line 8 would be doing a dis-service to their workers.
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Thanks Ira; that's an important point.
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have two 15 year old children that entered the work force last year.
They received W-2 wage summaries for 2012:

One earned $222.93
The other earned $1580


Just an additional suggestion. You might want to suggest to them that they put something into a Roth IRA. My kids always did that with earnings, and it worked out well. I wanted them to max it all out, so I used to match their contributions in the Roth so that they could save half, and have half for spending, but with my matching, they were able to save 100% of their income in a Roth.

If you think about it, a Roth is the perfect savings vehicle for them since the dollars going in are after-tax dollars, but they don't make enough to pay any tax at all, and everything coming out on the other side is also not subject to tax, under today's tax rules.
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From the IRS site, it states that 1040EZ may be used as long as taxable income is less than $100,000.

But there is also a line that tips must be included in boxes 5 and 7 of Form W-2.

Looking over their W-2's I see nothing indicating if Tips are or are not included. There is however a Box 8 for "Allocated tips", but that is blank in all cases.


You're making this too hard. If Box 7 has a number other than zero, tips are included on the W-2. If the worker reported all tips to the employer you can use the EZ. If the worker received tips not shown on the W-2 you may not use the EZ.

One of their jobs is working in a restaurant, but as I understand it Tips are shared among the staff and they don't personally pocket them.

Who does pocket them? Your statement makes no sense. Pooled or not, does tip money wind up in the worker's pocket at the end of the day? If so, it's income to the worker. If the worker receives more than $20 in tips in a month the worker is required to report them to the employer, who is required to include them in boxes 1, 5 and 7 on the W-2. If the worker received tips that weren't reported to the employer they are reported on Form 4137 attached to the 1040.

So, still thinking that 1040EZ is appropriate for children in most situations and that an employer that fills in line 8 would be doing a dis-service to their workers.

How is the employer doing a disservice to the employees by following the law, which requires entries in Box 8 in certain circumstances. Box 8 came about because there was rampant cheating among tipped employees and their employers. The kind it appears may be going on at this restaurant. In fairness to the employer, the tip rules are complicated, and some employers fail to comply because they don't understand.

This is a teaching moment for you with respect to your child. The lesson: do the right thing even when it's inconvenient to do so.

BTW, it appears that you children qualify for exemption from income tax withholding. By noting that on their W-4's they can avoid having to file just to get a refund.

Phil
Rule Your Retirement Home Fool
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One of their jobs is working in a restaurant, but as I understand it Tips are shared among the staff and they don't personally pocket them.

Who does pocket them? Your statement makes no sense. Pooled or not, does tip money wind up in the worker's pocket at the end of the day?


I knew a few restaurants where the tips are all pooled, and the owner takes them all. The waiters and waitresses do not get them. Makes for a lot of resentment on the part of the wait staff. I am under the impression that this is illegal in this state, but if they complain, they would get fired and being out of a job is even worse than having your tips stolen by the employer.
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resentment ? good gosh,,, all quit on the same day
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