There is a chance that if you have children that they may be required to file a tax return, even if they are a dependent child. Generally, children will be held accountable for filing any returns as well as paying taxes that may be owed along with penalties and interest. The parents may also hold some liability in some cases where the child files to pay. If a child is unable to files taxes for any reason the parents will have to file them on behalf of the child.
Filing a return is determined by the amount of income that is earned or unearned through the year. Unearned income is generally earned through investments while earned income refers to money made working.
Earned Income
If a child has earned more than the standard deduction then they are required to file a tax return. In 2014 the standard deduction was $6,200. An example of this is: you have a 16 year old child who has earned $8,000 in income between wages at a summer job as well as working weekends throughout the school year. Even though your child had no investment income, they are still required to file a tax return because their total annual income is above the earnings threshold.
Unearned Income
If your child has unearned income greater than $1,000 they are required to file a tax return. For example: you have a 15 year old child who grossed $2,500 in interest and dividend income for the year, but did not work a job and has no earned income. The child is still required to file a tax return since their only income is greater than the limit.
If you have a child under 19 years of age, or 24 years of age and full time student, you may be able to include your child’s unearned income with your own tax return, in this case your child would not have to file their own return.
Both Types of Income
If you have a child that has both earned and unearned income for the year they may be required to file a tax return if the following is true:
- The unearned income is greater than $1,000.
- Any earned income is over $6,200.
If they have both income types and the total is greater than the sum of either two options:
- $1,000
- Total income exceeds $6,100 plus an additional $350.
For example: You have a college age student that is still claimed as a dependent, they received $3,500 in earned income while working a job, they also received $100 in unearned income from taxable interest. If this case of this scenario they do not have to file a tax return since both income types are below the set limit, and the total amount of income is less than then added $350 to earned income.
