Can your dependent file a tax return

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Learn what education credits and deductions you qualify for and claim them on your tax return Get started. The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice.

Skip To Main Content. OVERVIEW It may be easier and less expensive to include dependents' income on your tax return rather than have them file their own return—in certain circumstances.

Definition of dependent children The definition of a dependent for tax purposes includes both qualifying children and qualifying relatives. Qualifying children must meet four criteria: They must be your child or stepchild, or a brother, sister, stepsibling or foster child.

Descendants of these people also qualify, like your niece. They must have lived in your residence with you for at least half of the tax year. They can earn a maximum of four credits per year. If the earnings come from a covered job, your child's employer will automatically take the FICA tax out of their paycheck. If the earnings come from self-employment, your child pays self-employment taxes quarterly or when filing.

It might seem a little premature for your child to consider opening an individual retirement account IRA —the IRS calls it an individual retirement arrangement —but it is perfectly legal if they have earned income. By the way, earned income can come from a job as an employee or through self-employment. If you can afford to, consider matching your child's contributions to that IRA. The total contribution must be no more than the child's total earnings for the year.

That lets your child start saving for retirement but keep more of their own earnings. It also teaches them about the idea of matching funds, which they may encounter later if they have a k at work. Filing income taxes can teach children how the U. In some cases, it also can help children start saving money or earning benefits for the future as noted above.

Even if your child doesn't qualify for a refund, wants to earn Social Security credits, or opens a retirement account, learning how the tax system works is important enough to justify the effort.

When it comes to helping your child file their income taxes, you should know the following:. Your child might be allowed to skip filing a separate tax return and include their income on your return in , but only if:.

Include your child's unearned income on your tax return by using IRS Form It all depends on the amount of unearned income your child reports. Explain to your child the basics of Social Security and Medicare and the benefits of earning credits in these programs. When your child starts to earn their own money, start talking about taxes right away.

It's up to you to discuss and teach income-tax filing to your child. The best way to do this is to start early, be patient, and walk your child through the process carefully. Fully explain as much as you need to but don't feel like you have to address every nook and cranny of tax law. After all, that can be pretty tough for even experienced taxpayers.

Finally, consult a tax professional if you get stuck. National Financial Educators Council. Accessed Dec. Internal Revenue Service. Social Security Administration. Income Tax. Social Security. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data.

We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Tax Preparation. Getting Help. Tax Strategy. Is there an age cut off for the child? Regardless of whether your dependent is married or unmarried — the IRS rules are the same as previously stated for age and income. In order to qualify for an education deduction, you must pay qualified education expenses for a student whom you can claim as a dependent.

Here are some qualified expenses: amounts paid for tuition and fees and other related expenses at an eligible education institution. Savings bonds used to pay for education are usually tax free — depending on when they were purchased and by whom. There are qualified tuition programs, called plans.