Does My Child Need to File Tax Return If He/She Has Taxable Income?

During the U.S. tax season, parents who are taxpayers not only need to file their own tax return but also consider whether their children need to file a tax return. Questions such as "Does my child need to file tax return?" and "Should my child's income be included in my tax return?" often arise.

Determining Whether a Child Needs to File Tax Return

Whether a child needs to file a tax return generally depends on three main criteria. For the 2024 tax year, a child who is claimed as a dependent by his/her parents must file a tax return if any of the following conditions are met:

1. The child’s  passive income  exceeds $1,300.

2. The child’s  earned income  exceeds $14,600.

3. The child’s  total income  exceeds the greater of:

a. $1,300, or

b. Earned income (up to a maximum of $14,150) + $450.

Case Study

Let's use an example to illustrate. Smith is a college student who works part-time and earned $5,000 in wages in 2024. Additionally, Smith’s parents invested in stocks under his name, generating  $1,000  in dividend income in 2024. Smith qualifies as a  dependent  under tax law.

To determine whether Smith needs to file a tax return for 2024, we analyze as follows:

• Earned income:  Smith's wages of  $5,000  do not exceed the $14,600 threshold.

• Passive income:  Smith's dividend income of  $1,000  does not exceed the $1,300 threshold.

• Total income threshold:  Smith's total earned income of $5,000, plus the $450 limit, gives a total threshold of  $5,450. Since Smith's total income is  $6,000, which exceeds this threshold. 

  As a result, Smith must file a tax return  for 2024.

Can a Child's Income Be Included in the Parent's Tax Return?

If a child meets both of the following conditions, their income may be included in their parent’s tax return:

• The income consists  ONLY of interest or dividends, and

• The  total income is less than $13,000.

In Smith's case, his income includes  both wages and dividends, so he does not meet these criteria. As a result,  Smith must file a separate tax return.

Determination of Filing Requirements

If a dependent child has income, the first step is to determine whether he/she needs to file a tax return based on the type and amount of his/her income. If a tax return is required, the next step is to assess whether the child’s income can be included in the parent's tax return. The full decision process can be illustrated as follows:

A dependent child's standard deduction may differ from the parents' standard deduction. Additionally, the tax calculation for the child's income may differ from that of adults. Please pay attention to the relevant tax regulations when filing, and it is recommended to consult a professional accountant for assistance.