Summer jobs and freelance gigs offer flexibility and extra income, especially for students, young adults, or anyone looking to make the most of their time off. But whether you’re scooping ice cream, walking dogs, tutoring online, or designing websites, one thing is crucial: tracking your income. It’s not just about staying organized. There are important tax and financial planning implications to consider.
Why It’s Important to Track Income
Failing to track income can lead to:
- IRS penalties for underreporting or not filing income.
- Missed deductions, such as mileage, supplies, or business expenses.
- Inaccurate tax returns, which can delay refunds or trigger audits.
What Qualifies as Freelance Work?
Freelance work is any self-employment or gig-based income where you’re not on a company’s payroll. Examples include:
- Tutoring or babysitting
- Graphic design or web development
- Selling crafts or products online
- Photography
- Social media management
- Delivery driving or rideshare (like DoorDash or Uber)
- Odd jobs found through apps or local networking
In tax terms, this type of work generally falls under independent contracting. In these cases, you’re typically responsible for your own taxes, including self-employment tax.
Who Needs to Track This Income?
Everyone earning money outside of traditional employment needs to track income, including:
- High school and college students
- Adults doing side gigs
- Minors with part-time or freelance jobs
- Anyone paid in cash, checks, or through apps like Venmo or PayPal
Even if you don’t receive a 1099 form from a client or employer, the IRS still requires you to report any income over $400 from self-employment.
What If the Worker Is a Minor?
Minors are not exempt from filing taxes just because of their age. The IRS requires anyone, including children, to file a tax return if they meet certain income thresholds. Whether or not a child must file separately depends on how much they earn and the type of income they receive.
Earned Income (Wages, Freelance Work)
If a minor earns income from a job (W-2) or self-employment (freelance or gig work), they typically must file their own tax return if:
- Earned income is over $15,000 (standard deduction for 2025), OR
- Net earnings from self-employment are $400 or more, even if total income is less than the standard deduction
Example: A 16-year-old who makes $3,000 from babysitting and $200 in tips does not need to file a return. But if they earn $3,000 in freelance income and $500 in net profit, they must file and pay self-employment tax.
Unearned Income (Interest, Dividends)
For investment income (such as from savings accounts or custodial brokerage accounts), the child may be required to file if:
- Unearned income exceeds $1,300 in 2024
In some cases, parents may elect to include the child’s unearned income on their own return using Form 8814, but this only applies to unearned income, not wages or freelance earnings.
Filing a Separate Return
A child or teen must file their own tax return (typically Form 1040) if their income requires it. Parents cannot report the child’s earned income on their own return, and doing so could result in errors or IRS notices.
Claiming the Minor as a Dependent
Even if the minor files their own return, parents can usually still claim them as a dependent, provided the child meets age, residency, and support tests. The child’s return should indicate that they can be claimed by someone else (usually on the standard deduction line of the 1040).
How to Tax Plan for Summer or Freelance Income
Here are smart steps to stay tax-ready:
1. Keep Accurate Records
Use a simple spreadsheet, app (like QuickBooks Self-Employed or Wave), or even a notebook to log:
- Dates of work
- Client names or job details
- Amounts earned
- Expenses related to the work
2. Set Aside Money for Taxes
Freelancers should save 20–30% of their earnings for federal and state taxes. This helps avoid surprises at tax time.
3. Understand Deductions
Common deductible expenses include:
- Equipment and supplies (laptop, software, art materials)
- Home office space
- Internet or phone usage
- Mileage or travel costs
4. Make Estimated Tax Payments
If you expect to owe more than $1,000 in taxes for the year, consider making quarterly estimated payments to the IRS.
5. File the Right Forms
Freelancers report income and expenses on Schedule C, attached to their personal Form 1040. If applicable, Schedule SE calculates self-employment tax.
For minors or part-time workers with W-2 income, filing a standard tax return may suffice, but it’s still important to include all sources of income.
Summer jobs and freelance work are great ways to earn money, gain experience, and build independence. But they also come with responsibilities, especially when it comes to income tracking and tax planning. Whether you’re a teen mowing lawns or a college student designing websites, keeping organized now can save headaches later.
