The IRS states, "payments for the services of a child under age 18 aren't subject to Social Security and Medicare taxes if the business is a sole proprietorship or a partnership in which each partner is a parent of the child. Payments to a child under age 21 aren't subject to FUTA. Payments are subject to income tax withholdings, regardless of the child's age."
A child who makes less than $12,950 will not owe taxes and is not required to file a tax return. However, if the income exceeds $12,950, income taxes should be withheld, and a return should be filed.
The filing requirements change per state. New York requires you to file a return if you are required to file a Federal Return or your Adjusted Gross Income was more than $3,100 for dependents or single filers.
You will file the 940/941 if you withhold; for taxes. The breakdown for the 940-941 is as follows:
- File Form 940 by January 31 of each year if federal unemployment taxes are withheld
- File Form 941 depending on the IRS schedule assigned (monthly, quarterly, or yearly) when income, Medicare, and Social Security taxes are withheld.
For more information, see the links below:
IRS Treatment for Child Employed By Parent
What Income Does a Minor Have to File an Income Tax Return
New York Filing Requirements
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