As parents, we encourage our children to work, so they can learn important values about work and independence. At what point, if at all, do children need to file an income tax return for the money they earn?
The IRS does not exempt anyone from the requirement to file a tax return based on age, even if your child is declared as a dependent on your tax return.1
Your dependent children must file a tax return when they earn above a certain amount of income.
Dependent children with earned income in excess of $13,850 must file an income tax return (for the 2023 tax year). Dependent children with unearned income of more than $1,250 must also file a return. And if the dependent child’s earned and unearned income together total more than the larger of $1,250, or a total earned income up to $13,450 plus $400.2
These thresholds are subject to change, so please consult a professional with tax expertise regarding your individual situation.
Here’s an example. Kyle is a 20-year-old college student who’s claimed as a dependent by his parents. He received $400 in unearned income and $5,500 for a part-time job on campus. He does not have to file a tax return because both his unearned and earned income fall below the thresholds. Kyle’s total income of $5,900 is less than his total earned income plus $400.
Even if your child earns less than the threshold amount, filing a tax return may be worthwhile if your child is eligible for a tax refund.
If you decide to prepare a separate return for your child, the same reduced standard deduction rules detailed above will apply.