Income Tax Basics
Paying federal income taxes for children.
Our two cents
Our two cents
Do your research to see if your child will need to pay taxes and, if so, which kind.
Does your teen need to file a return? That depends on a number of factors, primarily age and the amount and type of income. In some cases, your teen's income can be reported on your return.
IRS Publication 929 is very helpful in sorting through the intricacies of these rules. You may also want to consult with your tax professional and refer to the instructions for IRS Form 1040 for details.
Unlike other taxpayers, your child's income is taxed differently depending on whether it is earned (through work) or unearned (from investments).
- If your child earns more than a certain amount from employment, he or she must file a personal tax return and may owe taxes.
- If your child has more than a certain amount of investment income, a tax return is also required. If this is your child's only income, you can either file a separate return for your child or include the income on your return.
Note: If you include your child's unearned income on your return, it could potentially increase your taxes.
- While some investment income is taxed at a preferred tax rate, investment income above a certain threshold is taxed at the parent's highest income tax rate.
For more details, see IRS.gov or a tax professional.
Investing involves risk, including loss of principal.
The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information.