Filing for Dependents

To prevent taxpayers from gaining an advantage from shifting income from the wealthier taxpayer to a dependent in a lower tax bracket, Congress has created convoluted income tests to determine which dependents are required to file a tax return on their own behalf. The filing threshold for individuals who can be claimed on someone’s return depends on three factors: the type of income (earned versus unearned); the dependent’s marital status (single or married) and the dependent’s age and sightedness (age 65-or-older or not; blind or not.)

Filing Threshold for Dependents Under Age 65 and Not Blind

An unmarried dependent must file if any of the following are true:

• Unearned income was over $950
• Earned income was over $5,800
• Gross income was more than the larger of:
• $950 or
• $300 plus amount of earned income up to $5,500

A married dependent must file if any of the following are true:

• Unearned income was over $950
• Earned income was over $5,800
• Gross income was at least $5 and the spouse files a separate return and itemizes deductions
• Gross income was more than the larger of:
• $950 or
• $300 plus amount of earned income up to $5,500

Filing Threshold for Dependents Age 65 or older and/or Blind

An unmarried dependent must file if any of the following are true:

• Unearned income was over $2,400 ($3,850 if both 65 or older and blind)
• Earned income was over $7,250 ($8,700 if 65 or older and blind)
• Gross income was more than the larger of:
• 2,400 ($3,850 if 65 or older and blind) or
• $1,750 ($3,200 if 65 or older and blind) plus amount of earned income up to $5,500

A married dependent must file if any of the following are true:

• Unearned income was over $2,100 ($3,250 if 65 or older and blind)
• Earned income was over $6,950 ($8,100 if 65 or older and blind)
• Gross income was at least $5 and the spouse files a separate return and itemizes deductions
• Gross income was more than the larger of:
• $2,100 ($3,250 if 65 or older and blind) or
• $1,450 ($2,600 if 65 or older and blind) plus amount of earned income up to $5,500

When tallying up a dependent's income, "unearned income" includes taxable interest, dividends, capital gains, unemployment compensation, taxable Social Security benefits, pensions, annuities, and trust distributions. "Earned income" includes wages, salaries, tips, and net income from a business; it also includes taxable scholarship and fellowship grants.

If the child or other dependent is too young or otherwise incapable of filing a tax return, his or her parent, guardian, or other legally responsible person must file the tax return for the dependent. In that case the responsible adult filing the return would sign the return for the dependent, and add their own name; for example, "John Jones, Jr., by John Jones, parent of minor child."

If the child is under age 19, or a full-time student under age 24, and his or her income is less than $9,500 and is solely from interest and dividends, the parent has the option to include the child's income on the parent's return by filing IRS Form 8814, Parent's Election to Report Child's Interest and Dividends, along with the parent's return. If this election is made, the child does not need to file a return.

Save Money Combining a child's income with that of the parents would save the child from having to file his or her own tax return; however, it frequently results in a slightly larger tax bill since the child's income will increase the parents' AGI and possibly reduce the deductible portion of the parents' itemized medical expenses, miscellaneous deductions, casualty losses, and IRA deductions. There are many other tax breaks that are phased out at higher levels of AGI and that can potentially be lost or reduced if a child's income is combined with the parents' income, so in most cases the family will be better off if the child files a separate return.