Most of the time, children are considered to be an extension of their parents when it comes to legal application until the age of majority. Therefore, many taxpayers are surprised to learn their child is a separate taxpayer, even as a minor. If your child has enough income, he or she has an obligation to file a return and pay the tax. In some cases, you may include their income on your tax return; in others, they’ll have to file their own tax return, or you will have to file a separate return on their behalf. Whether this is required depends on both the amount and source of the minor’s income.
The first thing to look at is their earned income. Earned income is defined in general as taxable employee pay, long term disability benefits, and self-employment net income, as well as other less common sources. A minor who may be claimed as a dependent must file a return once their income exceeds their standard deduction. Starting in 2018, the standard deduction for a dependent child is total earned income plus $350, up to a maximum of $12,000. Thus, a child can earn up to $12,000 without paying income tax.
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