When Do Kids Need to File Taxes?

Know When Minors Need to File Income Taxes

Boys playing with cash register and counting coins
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Do your kids earn interest and dividends from investments you've made for them? Do they have a job? Does age matter? Find out when you need to files taxes for kids.

Age for Filing Income Tax

First, your child is never too young nor too old to file income taxes if they have earned income or they have income from savings or investments. Their age doesn't matter, the amount that they earn is what matters.

A toddler with a great savings account funded by doting grandparents may need to file for income tax, while a teenager working at odd jobs may not.

Income Requirements for a Child to Pay Income Tax

The income requirements for filing can change each year, so it is important to consult the latest tax publication. The rules are laid out in Publication 929, Tax Rules for Children and Dependents.

Children and other dependents do not need to file income taxes if their earned, unearned (such as interest and dividends) or a combination of both are under certain limits. It's easiest to calculate if they have just one or the other, but the IRS provides a worksheet to figure it out if they have both.

For the 2015 tax year, children claimed as a dependent on your return must file their own taxes if they meet any of the following:

  • Earned and unearned total income is greater than the larger of $1050 or earned income(up to $5950) plus $350.

How to File a Child's Income Tax

There are two methods to filing kid's tax returns.

  • Attach to parent's return. If the child is under age 19 (or a full time student under 24), and the child's income is less than $10,500 and only from interest and dividends, it can be attached to the parent's return using Form 8814. Although, this may result in higher taxes on qualified dividends or capital gains. Please note that the $10,500 figure pertains to the 2015 rules and may be different in the current year, so consult the current tax publication 929.
  • Complete individual tax return for child. If the requirements are not met to attach it to the parent's return, or you want to ensure lower taxes, the child should file his own return.

Kiddie Tax on Investment Income

It's important to know that if interest plus dividends plus other investment income total more than $2,100, part of the child's income will be taxed at the parent's tax rate instead of the child's tax rate. This is referred to as the kiddie tax. Note that the $2,100 figure pertains to the 2015 guidelines and consult the current tax publication 929 to see if it has changed.

Other Filing Requirements for Children

In addition to the income requirements, there are other circumstances when children must file a tax return. One example is tax on Social Security and Medicare uncollected by an employer. For all the requirements, see Publication 929, Tax Rules for Children and Dependents.

Optional Filing

Even if a child is not required to file a tax return, he can choose to file one. He may want to do this if he had withholding from a part-time job and wants to get a refund.

Once you determine that you kids will need to file a tax return, you can use CompleteTax to file a free child tax return.

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