MooneyOnMoney.com

Tax Read Time: 3 min

Does Your Child Need to File an Income Tax Return?

As parents, we encourage our children to work, so they can learn important values about work and independence. At what point, if at all, do children need to file an income tax return for the money they earn?

The IRS does not exempt anyone from the requirement to file a tax return based on age, even if your child is declared as a dependent on your tax return.1

Your dependent children must file a tax return when they earn above a certain amount of income.

Dependent children with earned income in excess of $13,850 must file an income tax return (for the 2023 tax year). Dependent children with unearned income of more than $1,250 must also file a return. And if the dependent child's earned and unearned income together total more than the larger of $1,250, or a total earned income up to $13,450 plus $400.2

These thresholds are subject to change, so please consult a professional with tax expertise regarding your individual situation.

Here's an example. Kyle is a 20-year-old college student who's claimed as a dependent by his parents. He received $400 in unearned income and $5,500 for a part-time job on campus. He does not have to file a tax return because both his unearned and earned income fall below the thresholds. Kyle's total income of $5,900 is less than his total earned income plus $400.

Even if your child earns less than the threshold amount, filing a tax return may be worthwhile if your child is eligible for a tax refund.

If you decide to prepare a separate return for your child, the same reduced standard deduction rules detailed above will apply.

1. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties.
2. Kiplinger.com, March 2, 2023

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

 

Related Content

Catch-Up Contributions

Catch-Up Contributions

Workers 50+ may make contributions to their qualified retirement plans above the limits imposed on younger workers.

What is the Value of Your Business?

What is the Value of Your Business?

Ascertaining the value of your business is important for a variety of reasons.

The Facts About Income Tax

The Facts About Income Tax

Millions faithfully file their 1040 forms each April. But some things about federal income taxes may surprise you.

 

Have A Question About This Topic?







Thank you! Oops!

An Overview of Renter’s Insurance

Don’t overlook the need for renter’s insurance if you rent your home.

Understanding Marginal Income Tax Brackets

An inside look at how marginal income tax brackets work.

Insurance Needs Assessment: Married With Children

When you’re married and have children, insurance needs will be different.

View all articles

Assess Your Life Insurance Needs

This calculator estimates how much life insurance you would need to meet your family's needs if you were to die prematurely.

Historical Inflation

This calculator shows how inflation over the years has impacted purchasing power.

A Look at Systematic Withdrawals

This calculator may help you estimate how long funds may last given regular withdrawals.

View all calculators

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

5 Smart Investing Principles

Principles that can help create a portfolio designed to pursue investment goals.

Principles of Preserving Wealth

How federal estate taxes work, plus estate management documents and tactics.

View all presentations

Questions to Consider When Buying a Vacation Home

Doing your research is key before buying a vacation home.

A Fruitful Retirement: Social Security Benefit

Taking your Social Security benefits at the right time may help maximize your benefit.

4 Elements of an Estate Strategy

Learn about the importance of having an estate strategy in this helpful and informative video.

View all videos