Who should pay taxes in my typical case?
Once you turn 18 you should open an account in your own name and transfer the assets there. Currently your mom is the one responsible as far as the IRS cares with respect to taxes as it is her name on the account. The taxes due will be based on your mom's tax rate. As a good child you can reimburse your mom for the taxes that she has to on your behalf. Also legally that money currently belongs to her. Any legal judgement against your mom can claim that money and it is not available for using as an asset by you on credit applications and such. A better solution would have been for your mom to open a custodial account in your name. This way the money is still yours (you just don't have control of it until you turn 18). While probably not an issue here, the transferring of money between you and your mom (and then back) is considered a gift by the IRS. If the account was very well funded then you could run into having to deal with the annual gift limit and lifetime gift exclusion. Based on the clarification that the question is in reference to India: while I don't know the particulars of the law in India my advice of transferring the assets when you turn 18 still remains. The main difference that I would see been India and the US would be the gift tax / exclusions. Unless someone else knows otherwise I would still expect the law in India to see the current account as being the property of the mother. "The bottom line is you broke the law.  While this is pretty much victimless, it is none the less a violation of the law and should be avoided in the future.  I would have not agreed to this as a parent and it sets a bad precedent.  As such I would avoid trading and move the money into cash until you turn 18.   Once you turn 18 you should transfer the money into an account of your own.  From there you may proceed as you wish. As far as paying taxes, of course you need to pay them.  Your mother did this as a favor to you and by doing such you caused her tax bill to rise.  As a gesture of goodwill you should at least provide her with half of the profits, not the 15% you propose.  Fifteen percent would be the ""I am an ungrateful son"" minimum, and I would seriously consider giving all of the profits to her."
"See Publication 505, specifically the section on ""Annualized Income Installment Method"", which says: If you do not receive your income evenly throughout the year (for example, your income from a repair shop you operate is much larger in the summer than it is during the rest of the year), your required estimated tax payment for one or more periods may be less than the amount figured using the regular installment method. The publication includes a worksheet and explanation of how to calculate the estimated tax due for each period when you have unequal income.  If you had no freelance income during a period, you shouldn't owe any estimated tax for that period. However, the process for calculating the estimated tax using this method is a good bit more complex and confusing than using the ""short"" method (in which you just estimate how much tax you will owe for the year and divide it into four equal pieces).  Therefore, in future years you might want to still use the equal-payments method if you can swing it.  (It's too late for this year since you missed the April deadline for the first payment.)  If you can estimate the total amount of freelance income you'll receive (even though you might not be able to estimate when you'll receive it), you can probably still use the simpler method.  If you really have no idea how much money you'll make over the year, you could either use the more complex computation, or you could use a very high estimate to ensure you pay enough tax, and you'll get a refund if you pay too much." besides accrued interest But that's important. one has $40,000 in their account and the other $9,000. Does one now pay higher income tax because he has more in his account or does he pay the same because he makes the same? If they are interest bearing accounts, then yes the guy with the $40K balance will pay a little more* income tax than the guy with $9K. * If the account earns 1%/ann and the $40K and $9K have been in there all year, then the big account will earn $401.84 interest, and the smaller will earn $90.41. What you need to do is to reduce the withholding from your wages, or pay a smaller amount in your quarterly payments of estimated tax (if you are self-employed). To reduce withholding from wages, fill out a new W4 form  (available from your employer's HR department). There is a worksheet in the form that will help you figure out what to write on the various lines.  As a single person, you are entitled to claim an exemption for yourself, and if you have not been claiming that exemption, doing so will reduce your withholding, and presumably your tax refund. "In the U.S., Form 1040 is known as the tax return.  This is the form that is filed annually to calculate your tax due for the year, and you either claim a refund if you have overpaid your taxes or send in a payment if you have underpaid.  The form is generally due on April 15 each year, but this year the due date is April 18, 2016. When it comes to filing your taxes, there are two questions you need to ask yourself: ""Am I required to file?"" and ""Should I file?"" Am I required to file? The 1040 instructions has a section called ""Do I have to file?"" with several charts that determine if you are legally required to file.  It depends on your status and your gross income.  If you are single, under 65, and not a dependent on someone else's return, you are not required to file if your 2015 income was less than $10,300.  If you will be claimed as a dependent on someone else's return, however, you must file if your earned income (from work) was over $6300, or your unearned income (from investments) was over $1050, or your gross (total) income was more than the larger of either $1050 or your earned income + $350.  See the instructions for more details. Should I file? Even if you find that you are not required to file, it may be beneficial to you to file anyway.  There are two main reasons you might do this: If you have had income where tax has been taken out, you may have overpaid the tax.  Filing the tax return will allow you to get a refund of the amount that you overpaid. As a student, you may be eligible for student tax credits that can get you a refund even if you did not pay any tax during the year. How to file For low income tax payers, the IRS has a program called Free File that provides free filing software options." "You mean to tell me that everyone doesn't pay his/her fair share?!  Please say it isn't so. :) Therein lies the welfare state:  Tax the rich more heavily to subsidize the poor, and hobble the rich's ability to do so on their own accord. In any case, though, in the United States, if you make any money whatsoever, that usually counts as income, and can hence be taxed.  Here's the IRS' definition of gross income.  Pretty all-inclusive, isn't it? Businesses are allowed to deduct expenses to count against their income, but if one has more expenses than income year after year, (a) this is the road to financial ruin, and (b) the IRS puts an end to the tax losses after enough years of failing to show a profit. So, sure, if a businessperson doesn't have any income, then they're technically using the roads, etc., ""for free,"" but unless the businessperson wants to live off the land and the kindness of strangers, he'd better turn a profit eventually.  Then he'll be taxed." Well, that's probably not even all of it. If that stranger did his taxes properly, then he already paid about a third of it to the government because wherever he got it from it was income for him and thus it must have been taxed. Now, the remainder is in your hands and yes, according to US law it is now your income and so now you too, must pay about a third of it to the government, and yes you are supposed to explain where it came from. Be careful giving it to somebody else or it'll be taxed yet again. disclaimer: I am not a US citizen There is more than one kind of tax. It is a little confusing because in reality the tax revenues collected by the Government aren't earmarked to a particular usage based on where they came from, usually. Well, the Gov't often CLAIMS they do, but for all practical matters it all goes in a big bucket. So just because a business or individual isn't paying income taxes doesn't mean they aren't paying anything for the use of Government furnished infrastructure/services. You are limiting the scope of your question to Income Taxes, which are taxes paid on profits to a business or individual. It makes perfect sense that you wouldn't pay a tax on something you didn't get. However, you aren't considering taxes that ARE being paid even by a company that isn't profitable. For example consumption taxes, employment taxes, and other fees. That same company paid sales tax on all the supplies it purchased, and probably collected/paid sales taxes on anything it sold. To take one of your examples, it paid for its share of using the roads through Government imposed taxes on fuel.  Don't worry about the Government. They know how to get theirs. They might not pull it from your right pocket, but they will make sure to get it from the left. "Since you seem to be the expert.... riddle me this:  What is the breakdown of entrepreneurs and how they operate by: LLCs, C-Corp, S-Corp, Sole-proprietor?  Is it: 15/35/20/30?  You basically need to know what this breakdown is in order to claim that ""most entrepreneurs pay hardly any income tax at all.""    So... what is it, and please cite your source." 75k is short of the 'highly compensated' category.  Most US citizens in that pay range would consider paying someone to do their taxes as an unnecessary expense.  Tax shelters usually don't come into play for this level of income.  However, there are certain things which provide deductions. Some things that make it better to pay someone:   Use the free online tax forms to sandbox your returns.  If all you're concerned about is ensuring you pay your taxes correctly, this is the most cost efficient route. If you want to minimize your tax burden, consult with a CPA.  Be sure to get one who is familiar with resident aliens from your country and the relevant tax treaties. The estimate you're looking at may be the withholding, of which you may be eligible for a refund for some part of that withholding.   Tax treaties likely make sure that you get credit on each side for the money paid in the other.  For example, as a US citizen, if I go to Europe and work and pay taxes there, I can deduct the taxes paid in Europe from my tax burden in the US.  If I've already paid more to the EU than I would have paid on the same amount earned in the US, then my tax burden in the US is zero.  By the same token, if I have not paid up to my US burden, then I owe the balance to the US.  But this is way better than paying taxes to your home country and to the host country where you earned the money. This depends on the nature of the income. Please consult a professional CPA for specific advise. "The $10,400 is in the question, in two pieces.  His employer withheld $8000, and her employer withheld $2400.  Thus they paid together $10,400 in income taxes, which are deductible if you itemize deductions and choose income taxes over sales taxes (you can deduct one or the other).  There's nothing ""standard"" about the amount, though it is standard to take the income tax deduction (almost always higher than sales tax)." "Gift taxes are paid by the giver, not the ""givee"". You'd have to claim the $500 on your income tax forms, though." If the $5000 is income, then you need to pay income taxes on it.  That's simply the way it works.  Hourly rate has nothing to do with whether or not you pay taxes. If it helps, try to think of the $5000 as the first $5000 you make for the year.  Now it's covered by your standard deduction and you're not paying taxes on it. This is wrong.  It should be  or  Now, to get back to self-employment tax.  Self-employment tax is weird.  It's a business tax.  From the IRS perspective, any self-employed person is a business.  So, take your income X and divide by 1.0765 (6.2% Social Security and 1.45% Medicare).  This gives your personal income.  Now, to calculate the tax that you have to pay, multiply that by .153 (since you have to pay both the worker and employer shares of the tax).   So new calculation  or they actually let you do  which is better for you (smaller).   And your other calculations change apace.   And like I said, you can simplify Q1se to  and your payment would be  Now, to get to the second quarter.  Like I said, I'd calculate the income through the second quarter.  So recalculate A based on your new numbers and use that to calculate Q2i.   or  Note that this includes income from both the first and second quarters.  We'll reduce to just the second quarter later.  This also has you paying for all of June even though you may not have been paid when you make the withholding payment.  That's what they want you to do.   But we aren't done yet.  Your actual payment should be  or  Because Q2ft and Q2se are what you owe for the year so far.  Q1ft + Q1se is what you've already paid.  So you subtract those from what you need to pay in the second quarter.  In future quarters, this would be  All that said, don't stress about it.  As a practical matter, so long as you don't owe $1000 or more when you file your actual tax return, they aren't going to care.  So just make sure that your total payments match by the payment you make January 15th.   I'm not going to try to calculate for the state.  For one thing, I don't know if your state uses Q1i or Q1pi as its base.  Different states may have different rules on that.  If you can't figure it out, just use Q1i, as that's the bigger one.  Fix it when you file your annual return.  The difference in withholding is going to be relatively small anyway, less than 1% of your income. Let's have a look at Who must send a tax return: You’ll need to send a tax return if, in the last tax year: And we're done. It doesn't matter that your tax will come out to zero - you still need to TELL them this, otherwise how are they going to know? 'Person liable for zero tax who doesn't send their tax return' and 'Person liable for a million quid of tax who doesn't send their tax return' look the same...