If you have a dependent who's earning income, good news — you can still claim them as a dependent so long as other dependent rules still apply. Your dependent's earned income doesn't go on your return. Filing tax returns for children is easy in that respect.
- The income of a tax dependent is included in the household income of any household where both that tax dependent and his or her claiming tax filer are present, only if the tax dependent is expected to be required to file a tax return.
For the 2025 tax year, the first $1,350 of a child's unearned income qualifies for the standard deduction, the next $1,350 is taxed at the child's income tax rate, and unearned income above $2,700 is taxed at the parent's marginal income tax rate. For 2024, these values were $1,300, $1,300, and $2,600, respectively.
Under no circumstances are you required to report either of your dependents ́ income on your return. If the dependents need to file returns or want to do so for any reason, their income goes on their returns, not yours. Neither of your dependent children has a filing requirement for federal taxes.
The child must have lived with you for more than half of the year.2 3. The person's gross income for the year must be less than $4,300.3 Gross income means all income the person received in the form of money, goods, property and services, that isn't exempt from tax.
The more you're willing to share, the better. Your children will need this information if a health issue forces them to get involved with your finances. They will need this information to prepare their own finances if they have to help care for or support you.
You can't add your dependent's W-2 income to your tax return.
The parent will have to pay tax on all the interest if it's above their own Personal Savings Allowance. You must also tell HMRC if a child has an income over their Personal Allowance, eg from a trust. The child will have to pay the tax on this. The tax year runs from 6 April to 5 April each year.
To meet the qualifying child test, your child must be younger than you or your spouse if filing jointly and either younger than 19 years old or be a "student" younger than 24 years old as of the end of the calendar year.
In calculating household income, the U.S. Census Bureau includes all pre-tax cash income of all individuals age 15 years or older belonging to a household, regardless of whether they are related to each other.
You should include the income of all dependents on your application. Note: Some dependents' income may not be counted if they're not required to file a federal income tax return for the year you want coverage. But include their income anyway.
Social Security benefits are considered taxable income, but they don't automatically disqualify you from claiming your parent as a dependent. As long as your parent meets the IRS's income and other eligibility requirements, you can still claim them as a dependent even if they receive Social Security benefits.
To claim a child's income on a parent's tax return, the child needs to be considered a qualifying child dependent of the parent. Parents can use IRS Form 8814 to elect to report their child's income on their tax return instead of the child filing their own return.
You can claim a child who works as a dependent if they still meet the requirements to be a qualifying child – including the age, relationship, residency, and support tests.
Cons of Claiming a College Student as a Dependent
If your child has earned income and you claim them as a dependent, they lose the opportunity to claim their own personal exemption (when applicable in future years) and certain tax credits that could be more advantageous for them.
It could help to create a general “rule” with your child, like 30% of their money should always go to saving or for every $2 in the spending jar, one should go to saving—however you and your child decide to prioritize and divide the money is fine.
If your child's interest, dividends, and other unearned income total more than $2,600, it may be subject to a specific tax on the unearned income of certain children. See the Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income for more information.
Your dependent children must file a tax return when they earn above a certain amount of income. Dependent children with earned income in excess of $14,600 must file an income tax return (for the 2024 tax year).
While there are many nuances to tax dependents, you can still claim them even if they earn income or receive SNAP benefits or other government assistance.
YCTC is also available for tax years 2020 and 2021. Eligible taxpayers would need earned income of $1 to $31,950. The credit decreased as earned income reaches certain phase out thresholds. Those with zero earned income or less would not qualify for YCTC.
If a dependent is claimed as a qualifying child on another person's tax return, they generally do not need to file their own tax return, even if their income exceeds the filing thresholds.
Even if your kids are young enough to be your dependents, they may still have to pay taxes. In some cases, you may be able to include their income on your tax return; in others, they'll have to file their own tax return. The need to file depends on both the amount and source of the minor's income.
At the federal level, assets you receive as a gift are usually not taxable income. However, if the cumulative value of gifts and transfers exceeds the federal estate tax exemption, this could result in additional tax liabilities.
It's good to let your kids have some financial freedom–especially if they're working part-time and have earned a little spending money. But try to keep them relatively reigned in. You don't want them to rack up credit card debt because they get in the habit of making impulse buys, especially on credit.