Do Minors Have to File Taxes?

7 minute read

It’s hard to think of your children paying taxes when they are still considered a dependent. But as your child reaches adulthood, they begin to accomplish some major milestones. One of these milestones is having to deal with taxes.

Walking your child through the tax process is an important teaching moment they can carry with them throughout their lifetime. This is all a part of the process of helping your child become more responsible and independent.

When a minor starts earning income, there are three potential tax scenarios:

  1. Their income is be included on your tax return
  2. The minor files their own tax return
  3. The minor earns income below the filing threshold and does not have to file at all

The primary factors that determine which tax scenario applies to your situation are primarily: the amount of income and the source of the income.

Here, you’ll discover whether or not your child will have to file a tax return this year and plan your taxes accordingly.

What are the Tax Advantages of Migrating to Florida?

One of the biggest tax perks is the lack of state income tax. Florida is one of the few states in the nation that doesn’t make its residents fork out money on state income taxes.

On the flip side of the coin, you will still have to pay sales and property taxes. Even at that, there’s a silver lining. Florida has the country’s lowest property tax rate.

Do Dependents or Minors Have to File Taxes?

Just because your child is a dependent doesn’t mean that they don’t have to file taxes. Dependents are required to file taxes under certain circumstances. If the dependent has earned income, unearned income, or opened a retirement account they may be required to file taxes.

There are certain cases where a dependent could include their income on the parent or guardian’s tax return. This occurs when they only have unearned income such as dividends, interest, or capital gains.

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Does Your Child Qualify For Dependent Status?

There are several requirements that your child must meet to qualify as a dependent. They must be your biological child, stepchild, adopted child, step-sibling, sibling, half-sibling, foster child, or offspring of any of the above and have lived with you more than half the year in the U.S.

Your child must be under 19 by the end of the tax year or if they’re a full-time student, under the age of 24 to qualify as a dependent. If the child is permanently disabled they can be of any age to qualify as a dependent. The only other two requirements include: a valid social security number and the dependent not having filed a joint return.

How Old Do You Have To Be To File Taxes?

The IRS does not base the determination of whether an individual needs to file taxes on age. Instead, it’s based on the source of the income and the gross income. Anyone whose gross income exceeds a specified amount for the given year is required to file a tax return and pay any applicable income tax. This includes children claimed as dependents.

Do Minors Have Taxes Taken Out of Their Paycheck?

Employment income is taxable as ordinary income, even for minors. Employers are required to withhold taxes from a minor’s paycheck. At the end of the year, their tax liability will be compared against what was taken out as withholding through their paycheck.

If the actual tax liability exceeds the total withholding from the paychecks then the minor will owe the difference when taxes are filed. If total withholding exceeds the actual tax liability, then the minor will receive a refund.

When Can Your Child Include Their Income on Your Return?

Your child may not have to file a separate return. Instead, they may be able to include their income on their parent’s return in certain situations. If your child’s only income is unearned, such as dividend, interest, or capital gains, then that can be included on the parent’s return (This can create certain kiddie tax implications).

If your child didn’t file a joint return and their income was less than $11,000, or your child was under 19 or 24 (if they’re a full-time student by the end of the year), then you can include their income on your return.

Your child’s income can also be reported on your tax return if your child had no estimated tax payments for the year, overpayments from the previous year, and federal income tax weren’t withheld from their income based on backup withholding rules.

How Do You Include Your Child’s Unearned Income on Your Tax Return?

Including your child’s unearned income on a parent’s tax return is a simple process. You simply use IRS Form 8814. You will need to enter your child’s name and social security number, then fill in the blank spaces if there is any interest, dividends, or capital gain distributions.

If you have dependents and are looking to see what the legal and tax implications are, tools like Corvee’s tax planning software may help you quickly find the strategies available based on the source and amount of your child’s income. Corvee finds ways to reduce your taxes.

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