In certain situations, dependent minors are required to file an income tax return. In other situations, they might not be required to file, but doing so could be to their benefit.
1. When the child’s earned income requires it
Minor dependents are required to file their own income tax return when their earned income equals or exceeds their standard deduction. For tax year 2023, the standard deduction for someone claimed as a dependent is the greater of $1,250 or their earned income plus $400 up to the standard deduction for a single person ($13,850 for tax year 2023). For example, a 16-year-old who earns $14,000 working as an employee at a local movie theater would be required to file a tax return.
2. If the child is self-employed
Many minors have ventured in online business, including social media content creation, to make money. However, even if they don’t make enough to owe any income tax they still might have to pay self-employment tax. If they make more than $400 a year of earned income and are not an employee, they will likely have to report their self-employment income for the purpose of paying their Social Security or Medicare taxes.
3. To receive a tax refund
If a minor works for a business and earns less than $13,850 in 2023, there is a good chance that the child will be eligible for a refund of any federal income taxes withheld from their paychecks. (Social Security and Medicare taxes typically are not refundable.) Even though the minor might not be required to file a tax return, they may choose to do so to claim their refund. You can still claim a child as a dependent if they file their own tax return, provided they meet the IRS’s rules for claiming a dependent on your tax return.
4. When the minor’s unearned income requires it
Some children have savings or investment accounts in their names and earn interest or dividends from those accounts. A minor who receives $1,250 or more in “unearned income” (tax year 2023) typically needs to file a tax return regardless of how much earned income they have. You can use IRS Publication 501 for guidance.
If a minor dependent receives more than $1,250 in unearned income, the parent who claims them as a dependent has the option of claiming the income on their own return. There are limits on the amount of a dependent's unearned income that a parent can claim. If you meet the criteria, you can file Form 8814 along with your 1040 to avoid your child having to file their own return. However, there are specific limitations on the amount of money involved and the tax owed may be higher than if your child filed separately. The claiming criteria include:
- Your child must not have any other filing requirements
- Your child's income must consist only of interest, dividends, and capital gains (unearned income)
- Your child must have been under age 19 (or under age 24 if a full-time student) at the end of the year
- Your child's gross income must have been less than the standard deduction
- Your child cannot file a joint return for the year
- No estimated tax payments were made for the year, and no overpayments from the previous year (or from any amended return) were applied to this year under your child's name and Social Security number
- No federal income tax was withheld from your child's income under the backup withholding rules
- The parent's return must be the one required to be used when applying the special tax rules for children
A child is responsible for filing a tax return when their income requires it. The child can complete and sign the return on their own, if they wish. Even if you help with the return, the child should sign it. If the child is unable to sign their own return, you can do so by writing: “By (signature), parent (or guardian) for minor child.”
