This week, we had several questions from parents that had minor children that just received their first W-2 form:

My child worked part-time during the year and I just received his W-2. He didn’t make much money; does he need to file a tax return? If so, do I need to add his income to my tax return?

In most cases, if your child is working a normal, entry-level, part-time job, he would not have to file a tax return. If your child falls beneath the wages, unearned income and self-employment thresholds below then he will not need to file a tax return.

Threshold 1 - Earned Wages

If your unmarried, dependent child made less than $5,950 working as an employee, then they are not required to file a tax return. The only major exception to this rule would be if the employer did not withhold the amount of social security tax (6.2%) or Medicare tax (1.45%). This may occur if your child did not report all of their tip income to their employer in a timely manner (see: Help! My Boss Is Forcing Me to Report My Tips!). You should also note that if Federal Income Tax was withheld, then your child will need to file a tax return to receive a refund for that amount (see: What Should My Daughter Claim on Her First W-4).

Threshold 2 – Unearned Income

If your child has investments and received less than $1,050 in unearned income, then he is not required to complete a tax return unless the combination of earned income and unearned income totals more than $5,950.

Threshold 3 - Self-Employment

If your child’s lemonade stand or car washing business does not have a gross income (income before expenses) of $400 then he will not need to file a tax return.

There are some other very rare instances in which your dependent child may be required to file a tax return. If any of the taxes below are owed, your child must file a tax return.

Alternative minimum tax
Additional tax on a health savings account
Recapture taxes, such as the tax from recapture of an education credit.
Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account.

OR

Had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes.

So, now that you suddenly realized that your child is required to file a tax return, can you simply add their earnings to your income and avoid filing an additional tax return?

The answer to this is both yes and no. If your child has earnings from employment or self-employment, then they must complete their own tax return. If all their earnings are from interest, dividends and capital gains (unearned income) and the total amount is less than $10,500 then you may be able to add their earnings to your income to prevent them from having to file a separate return. You child must also meet all the requirements below:

Your child was under age 19 (or under age 24 if a full-time student) at the end of the year.
Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends).
Your child is required to file a return unless you make this election.
Your child doesn’t file a joint return for the year.
No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was 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.

If you decide to add your child’s income to your tax return it will increase the amount of tax that is paid on their income. There are several other tax situations to be aware of If you choose this option, so please contact a tax professional before you decide to move forward.

Lastly, I received this question several days ago:

My son is now 17 and works a part-time job. He had taxes taken from his check during the year. He does not want my help in completing his tax return. Can I complete his return without his permission? If not, will I be liable for any mistakes that he makes on his return?

In general, your child is responsible for filing his tax return. If your child is not able to file his or her own return for any reason, the child’s parent, guardian or legal representative can file the return instead. If your child can’t sign his own return, then parent/guardian can sign the return on his behalf (noting that it was signed by the parent or guardian). If this occurs, then the person who signed the tax return can discuss any issues about the tax return if the child receives a notice from the IRS. In any event, your child is liable for all taxes, penalties and interest owed, but in certain circumstances the parent may be liable for any unpaid taxes.

Call TaxBunny at 206-257-5728 for all your tax and bookkeeping needs. We can even file your return remotely.

I Want To Add My Child's Income To My Tax Return

MORE POSTS YOU MIGHT LIKE