When Does Your Child Have to File a Tax Return?

Learn the rules about when a child must file a tax return because of earned and unearned income.

Sometimes one or more of your children will need to file their own tax returns. This can be true even though they are still your dependents for tax purposes. Generally, a child is responsible for filing his or her own tax return and for paying any tax, penalties, or interest on that return. However, if your child does not pay the tax due on this income, the parents may be liable for the tax. Moreover, if a child cannot file his or her return for any reason, such as age, the child's parent or guardian is responsible for filing a return on the child's behalf. The Tax Cuts and Jobs Act (“TCJA”) changed the rules on when children need to file. However, these rules don’t kick in until 2018.

The Rules for 2017

Whether your child is required to file a tax return for 2017, depends on how much earned and unearned income he or she earned during the year. "Earned income" is income a child earns from working. "Unearned income" is income earned from investments.

Earned Income Only

A child who has only earned income must file a return only if the total is more than the standard deduction for the year ($6,350 in 2017).

Example: William, a 16-year-old dependent child, worked part time on weekends during the school year and full time during the summer. He earned $7,000 in wages during 2017. He did not have any unearned income. He must file a tax return because he has earned income only and his total income is more than the standard deduction amount for 2017.

Unearned Income Only

A child who has only unearned income must file a return if the total is more than $1,050 in 2017.

Example: Sadie, an 18-year-old dependent child, received $1,900 of taxable interest and dividend income during 2017. She did not work during the year. She must file a tax return because she has unearned income only and her total income is more than the unearned income threshold for 2017.

However, the parent of a child under age 19 (or under age 24 if a full-time student) may be able to elect to include the child's interest and dividend income on the parent's return. If the parent makes this election, the child does not have to file a return.

Earned and Unearned Income

If a child has both earned and unearned income, he or she must file a return for 2017 if:

  • unearned income was over $1,050
  • earned income was over $6,350, or
  • earned and unearned income together total more than the larger of (1) $1,050, or (2) total earned income (up to $6,350) plus $350.

Example: Mike, a 19-year-old college student claimed as a dependent by his parents, received $200 taxable interest income and earned $2,750 from a part-time job during 2017. He does not have to file a tax return. Both his unearned and unearned income are below the thresholds, and his total income of $2,950 is less than his total earned income plus $350.

The Rules for 2018 and Later

The Tax Cuts and Jobs Act made major changes in the way children are taxed. Starting in 2018, the standard deduction was increased to $12,000 for all single taxpayers, including dependent children. The increased standard deduction applies to all income earned by children, whether earned or unearned. Thus, a child can earn a total of $12,000 in income, whether earned or unearned, without paying any tax in 2018. As a result, for 2018 and later, a child need file a return only if:

  • the child’s earned and unearned income combined is more than the applicable standard deduction for single taxpayers ($12,000 for 2018), or
  • the child has business or self-employment net income (gross income minus expenses) of at least $400.

Should a Return Be Filed Even If Not Required?

Even if your child does not meet any of the filing requirements discussed, he or she should file a tax return if (1) income tax was withheld from his or her income, or (2) he or she qualifies for the earned income credit, additional child tax credit, health coverage tax credit, refundable credit for prior year minimum tax, first-time home buyer credit, adoption credit, or refundable American opportunity education credit. See the tax return instructions to find out who qualifies for these credits.

By filing a return, your child can get a refund.

What Is a Child's Income Tax Rate?

For federal income tax purposes, the income a child receives for his or her personal services (labor) is the child's, even if, under state law, the parent is entitled to and receives that income. Thus, dependent children pay income tax on their earned income at their own individual tax rates.

However, the rules are very different in the case of unearned income for a child under 19 years of age (or under age 24 if a full-time student). Through tax year 2017, income tax on unearned income over an annual threshold had to be paid at the parent's maximum tax rate, not the child's own individual tax rate (which would usually be lower than that of the parents). This special "kiddie tax" prevented parents from transferring income producing assets to their children so they could pay tax on the income at their lower tax rates. However, starting in 2018, and scheduled to continue through 2025, the Tax Cuts and Jobs Act changes the rates for the kiddie tax. During these years, all net unearned income will be taxed using the brackets and rates for trusts and estates. For details, see the article "The Kiddie Tax."

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