son had to pay taxes

[mine6m]

son is 19, he worked for his father, single member LLC. He made a little over 25k and he said he had to pay over 1k in taxes. My thought was he would owe less or nothing.  He did pay into the s.s. and medicare but not federal as per being a son in the business. Is there a certain way the w-4 or w-2 to be filled out? Did we do something wrong?

[Hal_Al]

The only thing you did wrong was to misunderstand how the tax system works. Any amount of wages over $14,600 will result in income tax for a 19 y.o. 

$25,000 - 14,600 (standard deduction) = $10,400 taxable income. So, $1040 income tax (The first $11,600 is taxed at 10%).  19 y.o. and/or dependents are not eligible for the Earned Income Credit (EIC).

Another thing that may be confusing you is that children, under 18, who work for the family business are not subject to FICA (social security and medicare) tax.  This is often mistaken to meant they're also not subject to income tax.  But, since your son is 19, even the FICA exception doesn't apply. 

[mine6m]

Now, he was underage working for his father and its single member Llc, the first 3 months were supposed to not be taxed because he was underage. How does that get put in?

[Opus 17]

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@mine6m wrote:

Now, he was underage working for his father and its single member Llc, the first 3 months were supposed to not be taxed because he was underage. How does that get put in?

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Sorry, there is no such rule or law.

Being underage, working for his parent, he is not subject to social security and medicare withholding, assuming he is being paid as a W-2 employee.  But his income is always subject to income tax.  There is no special exemption as you describe.

(If you think there is a state exemption, you need to look at the laws of your state.  There may be a question about this in the state tax module under state-specific additions and subtractions to income.)

[mine6m]

thank you for the response, as there is so many information on irs, it gets all too confusing. for some reason i thought futa was part of the income tax, that is why we thought it wouldn't be taxed.  thanks for the patience

[Opus 17]

@mine6m 

You got there in the end.  The parent-employer (in this case, the parent's LLC) does not have to withhold social security and medicare tax, does not have to pay the employer matching half of social security and Medicare, and does not have to pay federal unemployment insurance tax.

But the employee always has to pay income tax.  

[mine6m]

thanks

[Hal_Al]

The parent-employer (in this case, the parent's LLC) does not have to withhold social security and medicare tax,  does not have to pay the employer matching half of social security and Medicare  if the child is under 18, and does not have to pay federal unemployment insurance tax if the child is under 21. 

But the employee always has to pay income tax.