Do i add my child tax to mine?

Question

My 16 year ago just got a job do i conbine her tax with mine or what do we do . My child has been working for 3 months now

Answer 1

First of all, you NEVER add earned income from one person to another. It doesn't matter how old she is, if she has earned income, you do NOT add it to your tax return. In fact, the only time you add income from your child to your tax return is when they have unearned income (interest, dividends, sale of stock, etc.) over $850 AND your child is under 18. As soon as your child hits 18, ALL of his/her income appears on their own tax return. (for 2005, these limits were $800 and "under 14", but I just read in the Wall Street Journal that the IRS is raising these limits to $850 and "under 18" for 2006).

Do they have to file? That depends on how much income and the type of income. If their income is less than $850, then no. If their income is over $850 but less than $5150 AND their unearned income is less then $250, then no. (sorry for all the complicated rules...blame congress).

Bottom line, if all of your child's income is earned (W-2) and they earn less than $5150 (for 2006), then they do NOT have to file a federal tax return. Should they file a tax return anyway even if their earned income is below $5150? Yes if the amount in box 2 of their W-2 (arrives in late January) is more than what it would cost to file a return. The amount in box 2 is what they had withheld and they would get all of this back if they earned $5150 or less in 2006. If they earned more than $5150, they need to file regardless. Their tax rate is independent of your tax rate. The first $7,550 of income over $5,150 is taxed at 10%. So, if they earned $8,000, their federal tax would be $285. If they withheld $500 on their W-2 (box 2), they would be looking at a refund of $215. When your child does his/her tax return (probably a 1040-EZ), make sure they check the "You" box on line 5 "Can someone claim you as a dependent?" if you are claiming him/her as a dependent on your return.

Whatever you do, never add earned income from anyone else (except your spouse) to your tax return.

All of the above information is for the federal goverment. Filing requirements for state tax returns vary from state to state. Check with your state to see what their filing requirement is. For Pennsylvania, the filing requirement is a measly $33 regardless if it is earned or unearned. I've never done a state tax return where the child's earned income is taxed on the parent's return.

Answer 2

The "kiddie tax" only applies to unearned income. Does she have a large amount of unearned income? The threshold for 2006 is $1,700. If her bank interest, stock dividends etc is less than that, you do not have to declare anything. She may have to do a return , though. This will happen if:

1. She has tax deducted and wants a refund.
2. Her income is above a certain level. To figure that, go to the link below and look at pages 13 and 12 (in that order because most likely page 13 applies as, even with the job I suspect you are providing more than half of her support and that she is unmarried).

If your daughter has only a W-2 from her job but has tax deducted, go to the IRS website once she gets the W-2. She can link to a variety of companies which have contracted with the IRS to provide free filing, provided the filer meets certain criteria. I am sure there will be one which meets her needs. If she is computer-savvy, she should have no trouble completing her return.

Answer 3

Skip is on the right track.
The Tax Increase Prevention and Reconciliation Act of 2005 is only for capital gains or unearned income.
If your child's only income is from working and earns more than $5,000 or has tax deducted, she should file a separate return. As she will most likely get a refund from deducted taxes.
Even though she can file her own return, she may still qualify as your dependent if her gross income is less than $3,200.
Check your 1040 tax booklet or the IRS website for complete information.

And definitely try the Free File Alliance offered by the IRS. You can file your federal return free of charge. Free E-file service search will start in mid-January. H & R Block and Turbo Tax are just two of the Free File partners.
I used it the last few years and will do it again this year.

Answer 4

She has to file her own income tax return. She'll get a W2 at the beginning of '07 and should file. However, for your tax advantage, she should probably still be listed as a dependent on your return.

Answer 5

You child will file a tax return next year. S/he will be taxed at your rate, so you must file your tax return before s/he can file his/her own. This is a new tax law passed this year.

If you find this law unfair, write to your representatives and congressperson. See if your representative and congressperson voted for the new tax bill, H.R. 4297, Tax Increase Prevention and Reconciliation Act of 2005, called TIPRA for short.

Answer 6

In newyork, both the child and the parent can claim it. But, the child had to check the section that she is being claimed on her parents. That way the child usuallly get back what she paid in. The earnings aren't that much to make a difference in the parents. Unless she is making big bucks.

Answer 7

The child should file on their own. They just have to use your tax rate since the republicans decided to raise taxes on kids above 14 starting this year.

Answer 8

You still can claim you child as your dependent. She may (or must, depending on how much income she has) file her own taxes stating that she is dependent on another taxpayer's return.