Is a minor’s income included in house hold income?

Question

I'm 16, I want to know will my income effect any forms of financial aid that my family is receiving, such as medical care, WIC, school free lunch program, or cause my parents to be moved into a higher tax bracket?

Answer 1

At your age, only money above $1400 per year is counted as parental income by the IRS.

This is called the "kiddie tax", introduced by Congress to discourage income shifting of major stock and bond assets to children.

Student loans have a different formula, because they WILL consider your income and assets as a separate category from your parents.

I strongly suggest you consult with your guidance counselor at high school or call the financial aid office of the university you are preparing to attend.

Answer 2

There are two separate issues at hand here: Public assistance and income taxes.

In general when it comes to public assistance the income of everyone in the household is taken into consideration in calculating any benefits. So for that purpose your income would count.

Now, as to income taxes, it's different. If you have any earned income, that is totally separate from your parents' tax return. You file your own return for that income. However if you have significant unearned income (such as dividends, interest, capital gains, rental income, etc.) then it may be taxed to you at your parents' higher rate or they may add it to their return and pay the taxes themselves. Consult with a tax pro if you have more than $1,700 in unearned income for 2007.