As a parent, determining whether your child needs to file a tax return can be confusing. Even if your child is listed as a dependent on your tax return, they may still be required to file their own return. Here we’ll outline some key factors that can influence your decision, including income levels, types of income, and filing status.
A Note on Annual Changes and Professional Advice
It’s crucial to note that tax thresholds and filing requirements change annually. The figures provided here are for 2024 and may be adjusted in future years. Consulting with a tax professional can ensure compliance with current rules and maximize potential tax benefits.
Earned Income Only
Earned income includes salaries, wages, tips, professional fees, and taxable scholarship and fellowship grants. If your child’s only income is from earned sources, a tax return is required if their income exceeds $14,600. If their earned income is below this threshold, they generally do not need to file. For instance, a child earning $10,000 from a part-time job would not need to file, while one earning $15,000 would be required to do so.
Unearned Income Only
Unearned income refers to income from sources such as taxable interest, dividends, capital gain distributions, and certain trust distributions. If your child’s unearned income exceeds $1,300, they must file a tax return or you may elect to include this income on your return as long as their total unearned income does not exceed $13,000.
Both Earned and Unearned Income
When your child has both types of income, the filing requirements become more nuanced. A tax return is necessary if the total income (earned plus unearned) exceeds the larger of $1,300 or their earned income plus $450. For example, if your child earned $1,000 in wages and received $500 in unearned income, their total income of $1,500 would require filing a tax return.
Special Situations to Consider
Certain circumstances may necessitate filing a tax return, even if the basic thresholds aren’t met:
- Withheld taxes: If taxes were withheld from your child’s paycheck, filing may result in a refund.
- Unemployment benefits: These may affect filing requirements.
- Self-employment: A tax return is required if net earnings from self-employment exceed $400.
Filing Requirements for Married Children
For married children, a tax return must be filed if any of these conditions are met:
- Gross income is at least $5, and their spouse files separately and itemizes deductions.
- Unearned income exceeds $1,300.
- Earned income exceeds $14,600.
- Gross income is greater than the larger of $1,300 or their earned income (up to $14,150) plus $450.
Looking Ahead
Determining your child’s need to file a tax return involves various factors, including income amount and type, filing status, and any special circumstances. Staying informed about annual changes to tax laws and seeking professional advice when necessary can help ensure your child meets their tax obligations while taking advantage of any potential refunds or credits. By understanding these guidelines, you can make informed decisions about your child’s tax filing requirements and use this as an opportunity to educate them about financial responsibility.
Tori Vergara provides tax and consulting services to dealerships, individuals and private foundations. Prior to joining ARB, Tori worked at a global firm for five years in Salt Lake City, Utah, specializing in expatriate taxation.
