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  5. At What Income Does a Minor Have to File an Income Tax Return?

At What Income Does a Minor Have to File an Income Tax Return?

Updated for Tax Year 2021 • July 4, 2022 11:51 AM


OVERVIEW

Even if your kids are young enough to be your dependents, they may still have to pay taxes. In some cases, you may be able to include their income on your tax return; in others, they'll have to file their own tax return. The need to file depends on both the amount and source of the minor's income.


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Youngsters are especially ambitious these days, and even if your kids are young enough to be your dependents, they may have to pay taxes. In some cases, you may be able to include their income on your tax return; in others, they'll have to file their own tax return. Whether this is required depends on both the amount and source of the minor’s income.

Earned income

A minor who may be claimed as a dependent has to file a return once their income exceeds their standard deduction. For tax year 2021 this is the greater of $1,100 or the amount of earned income plus $350 up to the full standard deduction of $12,550.

As an example, a 15-year-old who works after school and earns less than $12,550 would owe nothing in taxes. Even so, if an employer withheld taxes from her paycheck, she'll have to file a tax return to obtain a refund.

Unearned income

The IRS also has a cutoff level for "unearned income," such as dividends or interest. If your child's income is above this year's level, they need to file; below that point, they aren't required to file a tax return. The amount for 2021 is $1,100.

If the child has both earned and unearned income, both amounts must be added together to determine if the total income triggers the mandatory filing requirement. The IRS provides a formula for figuring this out in Publication 929.

Additional requirements

Even if a minor's income is less than the minimum threshold, the IRS sets other conditions that may require a tax return to be filed. A minor must file, for example, if a minor owes Social Security or Medicare taxes on tip income.

In addition, a minor with income from self-employment may owe Self-Employment Tax, which means paying both the employee’s and employer's share of Social Security and Medicaid taxes. The income trigger for owing tax for self employment is $400 in 2021.

Filing on your child's behalf

If your child is required to file a tax return for unearned income, the IRS gives you the option of claiming the money on your return instead. There are certain restrictions, including a limit to the amount of money involved, and the tax you’ll owe may be greater than if your child filed an individual return. If you qualify, file Form 8814 with your 1040 and the IRS will not require your child to file.

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