Taxes For Minors

If your child has income form a job or a savings account, should he be paying taxes?

If your child has income form a job or a savings account, should he be paying taxes? Doesn't he make too little to be taxed? If his income is taxed, what will be the rate? This article will help answer these questions.

Your child may not have to file a tax return of his own if he makes less than $800 per year in income from interest or dividends. If he is under 14, his income can be included on your tax return. However, it will then be taxed at your rate, which will undoubtedly be higher than the rate would be if the child filed his own return. Although you save the work and inconvenience of preparing a separate return, you will lose financially.

If your child has only unearned income, makes more than $800 per year, and is 14 or older he must file a tax return and pay taxes on the income. This is unlikely to be a high amount, however, and there may even be no tax due at all.



Your child may not have to file a tax return of his own if he has only earned income and he makes less than $4,850 per year. However, if he makes over $4,850 a year he must file a return. If he makes more than $400, he must pay Social Security tax on his earnings. If he had a job mowing lawns or babysitting, where he works for himself instead of a regular employer, he will have to pay both halves of the Social Security tax, his own and the half the employer would ordinarily pay.

If the child has both earned and unearned income, he must file a tax return if he makes more than $800 in unearned income or $4,850 in earned income, or if his gross income is more than $800 or his earned income (up to $4,600) plus $250.

In any event, the tax rate for the child will usually be at the lowest tax bracket, since he is unlikely to have more than a few thousand dollars in earned income or interest. Be sure to obtain a Social Security number for your child as soon as you are able, so that he will be able to file if he needs to. You will need the Social Security number for to claim him as a dependant anyway.

Even if your child files his own taxes, you will probably still want to claim him as a dependant on your taxes, since the exemption will lower your adjusted gross income and you probably pay taxes at a greater rate than your child. Your child should claim himself as an exemption if he makes much more than a few thousand dollars in income. Calculate the taxes for yourself and your child both ways, and pick the way that allows you both to pay the most taxes overall. If you will claim your child as an exemption, he will not be able to claim an exemption from withholding when he fills out his W-4 form. If your child is blind, you will not be able to take the exemption for his blindness if you claim him as a dependant. If he will claim himself as an exemption and expects to have no tax liability, he may claim an exemption from withholding. He must renew the exemption every year.

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