We encourage our children to work to learn independent principles. When do children have to file an income tax return for the money they earn, if at all?

Even if your child is listed as a dependent on your tax return; the IRS does not exempt anyone from filing a tax return based on age.

Most children have only a hazy understanding of income taxes, let alone the same laws they must follow. As a parent, it is your responsibility to assist your child in completing this rite of passage by reviewing tax-filing requirements or seeking advice from tax professionals.

Dependent Child Status

Some people wrongly feel that because their child is a dependent, they are exempt from filing taxes. However, if your child meets any of the requirements below, their status as a dependent child does not exempt them from filing an income tax return.

Your child must meet the following criteria to be considered as your dependent:

● Have a Social Security Number (SSN)
● Be a son, daughter, adopted child, stepchild, eligible foster child, sibling, half-sibling, step-sibling, or offspring of any individual.
● Be under the age of 19, or under the age of 24 if a full-time student or any age if permanently and incapacitated at the end of the tax year.
● Live with you for more than half the year in the U.S.

 

If your dependant has one or more of the following forms of income, they may be required to submit a return:

Earned Income:

It includes earnings, salaries, tips, and other compensation you earned. Scholarships and fellowships that are taxable also count as earned income.

Unearned income:

Unearned income includes taxable interest, capital gains, and ordinary dividends. Unemployment compensation, taxable social security benefits, pensions, annuities of unearned income from a trust, and capital gain distributions are all examples of unearned income. Unearned income isn’t always exempt from taxation.

At any age:

If you are dependent on someone else’s tax return and are filing your own, your standard deduction cannot exceed $1,100 or the sum of $350 plus your individual earned income.

You cannot e-file your first year if you are under 16 and have never filed a tax return. The following year, you will be able to e-file your return.

Filing your child’s tax return

If your child can do so, he must file their tax return. If he isn’t old enough to understand how to file a tax return, you’ll have to file it for him or put his earnings on your return.

If you prepare the return, you can sign it on his behalf if he cannot do so. You must, however, sign your name and indicate that you are signing for the child as the parent or guardian. Signing your child’s return permits you to talk to the IRS about it if there are any questions later.

 

Should a Return Be Filed Even If Not Required?

Suppose your child qualifies for the earned income credit, additional child tax credit, health coverage tax credit, refundable credit for prior year minimum tax, first-time homebuyer credit, adoption credit; or refundable American opportunity education credit.

In that case, they should file a tax return even if they do not meet any of the filing requirements discussed. Who qualifies for these credits can be found in the tax return guidelines. Your child may be eligible for a refund if they file a tax return.

 

Reporting Your Child’s Income on Your Tax Return

Your child may be allowed to forego filing a separate tax return and instead put their earnings on yours, but only if the following conditions are met:

● Interest, dividends, and capital gains are your child’s only sources of income (unearned income).
● At the end of the year, your child was under 19 (or under the age of 24 if a full-time student).
● The gross income of your child was less than $11,000.
● Unless you select this choice, your child will be obliged to file a return.
● For the year, your child does not submit a joint return.
● Under the backup withholding regulations, no federal income tax was withheld from your child’s earnings.
● When implementing the unique tax regulations for children, you must use your parent’s return.