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 an independent on your tax return.
Your dependent children must file a tax return when they earn above a certain amount of income.
Dependent children with earned income (that is, income from a job or self-employment) in excess of $12,000 must file an income tax return.
Dependent children with unearned income (interest, dividends, capital gains, etc.) of more than $1,050 must also file a return. And if the dependent child’s earned and unearned income together total more than the larger of $1,050 or a total of earned income up to $12,000 + $350.
Here’s an example. Kyle is a 20-year old college student who’s claimed as a dependent by his parents. He received $400 I 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 if $5,900 is less than his total earned income + $350.
If you decide to prepare a separate tax return for your child, the same reduced standard deduction rules detailed above will apply.
These thresholds are subject to change, so please consult a professional with tax expertise regarding your individual situation.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2019 FMG Suite
Outside the sun is bright, the skies are blue and it couldn’t be a more beautiful winter day.
It also happens to be -30. Factoring in the wind, it “feels like” -50.
Schools, some government offices and many private businesses are closed. The local power company has just announced an urgent request for homeowners to dial back their thermometers to 60 to reduce demand on the power grid.
To me it sounds like a perfect day to work from home, break out the fingerless gloves, and get a jump on my 2018 tax return.
Of course, life doesn’t have to be this way. Some states never see temps fall below freezing and there’s even a few where state income taxes don’t exist.
However, the move to a more weather and tax friendly state comes at a price.
Before you sell the ice shanty and move to a state where the taxes and temps are more favorable, consider this: