Are you a dependent, in relation to federal taxes, of another taxpayer? If so, you may be wondering whether or not you are required to file your own tax return. The following terms can help you make an accurate determination of your need to file:
- Earned Income: wages, salaries, tips, or other professional monies acquired for services rendered, including taxable scholarships or grants
- Unearned Income: taxable, interest ordinary dividends, and distributions of capital gains received throughout the tax year. Unearned income can include unemployment compensation, annuities pensions, taxable portions of social security benefits, and trust fund payments.
- Gross Income: the combines total of earned and unearned income
Dependents are required to file a tax return when the following statements are true:
- You have unearned income greater than $1,000
- You have earned income over $6,200
- Your gross income was greater than $1,000 or the amount of your earned income (up to $5,850) plus $350.
Dependents under the age of 18 with unearned income that exceeds $2,000 are taxed at the same rate as their parents, if the parental rate is higher. Certain rule apply to older dependents as well.