When the lemonade stand makes bank: Teens and young adults often go into business for themselves. This work can include babysitting, lawn mowing, dog walking or other part-time work. When anyone is an employee of a business, their employer withholds taxes from their paycheck. However, when they are classified as an independent contractor/self-employed, they’re responsible for paying taxes themselves. Things to keep in mind: Everyone, including minors, must file a tax return if they had net earnings from self-employment of at least $400. If they owe taxes, teens and young adults should file their own tax return, even if their parent or guardian claims them as a dependent. They can prepare and sign their own tax return. There is no minimum age to sign a tax return. Parents can’t claim a dependent’s earned income on their own tax return. In addition to income tax, self-employed persons are generally responsible for self-employment tax as well. It’s like the Social Security and Medicare taxes withheld from the pay of most wage earners. Here’s what entrepreneurs can do: It’s good to make and keep financial records and receipts during the year. If a self-employed person expects to owe at least $1,000 in tax for 2022, they must make estimated payments on a quarterly basis. They should be sure to pay enough tax on time to avoid a penalty. When tax season rolls around, they should file a tax return. For more information, consult your preferred Tax Advisor.