One of the most frequent questions we get at tax time is whether a child who earned money at a part-time job or a summer job has to file a tax return.
The answer depends on two things: how much did they make while working, and did they also have unearned income?
Unearned income is income from sources such as interest or dividends. This is money accumulated without having to work at a job.
As of 2018, if a minor can be claimed as a dependent on a parent’s or guardian’s taxes, they will have to file a tax return if the amount earned exceeds their standard deduction. For 2020, the standard deduction could not exceed the greater of either $1,100 or what they earned plus $350 with a maximum amount equal to $12,400.
Even if your child did not reach these limits, it might be a good idea to file a return if their employer withheld taxes since they may be eligible for a refund. You cannot receive a refund without filing.
If a child’s only made unearned income, then the rules are different, and parents or guardians may add that income to their own taxes with form 8814.
If you have any questions about your child’s earned or unearned income, call our office for a consultation.