Image courtesy of user “congerdesign” on Pixabay.com

This is a common question this time of year. Here’s an example:

My 17-year-old son worked part-time at Hy-Vee last summer and made $980. No income taxes were withheld. Does he need to file a tax return?

When a Dependent Needs to File a Return

Let’s look at the rules for when a dependent needs to file a tax return. For reference, see Table 1-2 on page 7 of this year’s IRS Publication 17.

When a dependent is single and under age 65, as in the case of a teenage child, they need to file a tax return if:

  1. Their unearned income (interest, dividends, capital gains) was more than $1,050, or
  2. Their earned income was more than $6,350, or
  3. Their gross income was more than the larger of: $1,050 or earned income up to $6,000, plus $350.

Let’s go through each of these one-by-one with our example.

ONE: in our scenario, the child has no unearned income. This item doesn’t apply, so we go on to item two.

TWO: the child’s earned income was $980, well below the $6,350 limit. This item doesn’t apply, so we go on to item two.

THREE: This item asks us to look at gross income, which in our scenario is $980. This is not more than $1,050, nor is it more than earned income plus $350 (which would be $1,330 in our case). Item three also doesn’t apply.

(NOTE: item 3 is basically saying a child can have earned income of up to $6,350 without needing to file a return.)

In our example here, of the three items applies, so the child doesn’t need to file a tax return.

What if Taxes Were Withheld?

Let’s say the child made $980 of income, and the employer withheld $49 of income taxes from their pay. In this case, you could choose to file a tax return to get a refund of the withheld taxes.

(ANOTHER NOTE: “withholding” and “withheld taxes” in this circumstance refers only to income taxes, not to FICA taxes.)

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”