There’s a chance that you may have children who are required to file a tax return, even if they are a dependent of yours. Typically, the child is held accountable for filing the return, as well as paying any taxes owed, along with penalties and interest. In some cases, if the child fails to pay, the liability may fall with the parents. Any child who can’t file their own return regardless of the reason will need to have a parent file on the child’s behalf.
The amount of income earned and unearned by your child throughout the year will determine if they need to file a return. Earned income refers to monies paid for working, while unearned income is earned through investments.
Children who have earned more than the standard deduction rate are required to file a tax return. For 2014, the standard deduction is $6,200. For instance: your 16 year old earned $8,000 in wages at a summer job full time, as well as weekends throughout the school year. Despite not having any investment income, your child still has to file a return because their total annual earnings are above the threshold.
Children who only have unearned income are required to file a tax return for any amount above $1,000 in 2014. Example: your 15 year old child grossed $2,500 in interest and dividend income for the year, but did not work at a job. Your child is still responsible to file because their only source of income is greater than the limit.
Parents of children under 19 years old (24 for full time students) may be eligible to include the child’s unearned income on their own return, in which case the child wouldn’t have to file a separate return.
Both Income Types:
Children who have both earned and unearned income are responsible for filing a return in 2014 if the following are true:
Unearned income was greater than $1,000
Earned income was over $6,200
Earned and unearned income total more than the largest sum of either two options: 1. $1,000 or 2. Total income up to $6,100 plus an additional $350.
An example: your college student child, still claimed as a dependent, received $3,500 in earned income from a job, as well as $100 in taxable interest. In this case, your child doesn’t have to file a return because both income types are below the set limit, and the total income amount ($3,600) is less than the added $350 to total earned income.