How to File Your Child’s First Income Tax Return

The Internal Revenue Service (IRS) wants its share of income regardless of the age of the earner, but different rules can apply depending on age and other factors. You might be wincing at the thought of having to prepare another tax return this filing season because your child earned some money, but there may be a few shreds of silver lining.

“We file a return for the kids typically when they start their part-time jobs over the summer or after school,” says Deb Camp, a CPA in Linwood, New Jersey. “This is done to have the federal and state withholding taxes that were withheld refunded back to them. It’s exciting for the kids to get their own little refund check in the mail.”

Tax Filing Requirements for Children

An unmarried individual who’s another taxpayer’s dependent, who isn’t age 65 or older, and who isn’t blind must file a tax return for any one of these three reasons:

• They had earned income from a job of more than $14,600 in tax year 2024. This is the return you’ll be filing for them in 2025. It’s the amount of the standard deduction for single filers, and it increases to $15,000 in tax year 2025.
• They had more than $1,300 in unearned income, such as that from investments. This is the threshold for tax year 2024.
• They had an overall 2024 gross income of more than $1,300 or earned income up to $14,150 plus $450, whichever is more.

The obligation to file a tax return kicks in if your child meets any one of these conditions. They don’t have to meet all three. The rules apply whether your child is age 12, 19, or 25. They aren’t age-based other than the 65-or-older criteria.

These rules apply to anyone who’s the dependent of another taxpayer. According to Camp, “Even when parents claim their child as a dependent on their own return, it usually doesn’t have any negative effect on the child’s return.”

Dependent Status and Tax Obligations

“Dependent” is the keyword here. The filing rules for children depend largely on them being claimed as another taxpayer’s dependent. Your child is your dependent, and you can claim them when you file your own return if they meet another set of rules. They must meet all five of these, however.

• The child must be related to you, but this includes stepchildren, foster children, or even grandchildren as well as siblings, half-siblings, nieces, or nephews.
• They must be younger than age 19 as of the last day of the tax year and younger than you or both you and your spouse if you’re married and filing a joint return. This extends to age 24 if they’re a student, however, and there’s no age limit if they’re permanently disabled.
• They must have lived in your home with you for more than half the year, but there are some exceptions to this rule. It’s OK if your child lives away at school for part of the year or lives with their other parent if you’re divorced or separated. The IRS provides tiebreaker rules in this case to determine which parent can claim the child if they can’t agree on which of them will do so.
• They can’t have paid for more than 50% of their financial support during the tax year.
• They can’t file a joint return with their spouse if they’re married—but there’s an exception to this rule, too. They can do so if the only reason they’ve filed jointly is to claim a refund for overpayment of withholding or estimated taxes.

Your enterprising daughter who has launched a dog-walking business or your teenage son who is bussing tables at the local restaurant most likely meets all these criteria. The next question becomes what you’ll have to deal with when filing a tax return for them and whether you want to simply claim some of that income on your own return.

Watch Out for the Kiddie Tax

It may not be just about your child reporting and paying an ordinary income tax. They may be liable for the “kiddie tax” as well.

This applies to unearned income including interest, dividend income, and capital gains distributions. Yes, we’re talking about that stock you purchased in their name and under their Social Security number for them when you were planning for their future. This income is subject to the kiddie tax if it exceeds $2,600 as of tax year 2024. Now you’re not just dealing with a Form 1040 tax return. You must also submit IRS Form 8615.

An additional set of rules can trigger this tax obligation:

• Your child is younger than age 18, or they’re 18 but had no earned income during the tax year that contributed more than 50% to their support. This provision ends on the date of their 19th birthday.
• They’re a full-time student who’s at least 19 but younger than 24 and had no earned income that contributed more than 50% to their support.
• You or the child’s other parent was alive as of the last day of the tax year.
• The child is required to file a tax return.
• The child doesn’t file a joint return with a spouse.

You can deduct $1,300 from your child’s net unearned income reported in tax year 2024, however. This increases to $1,350 in tax year 2025. Only the remaining balance will be subject to the kiddie tax provided they have no earned income.

This works out to the first $1,300 or $1,350 being exempt from the kiddie tax, depending on the year for which you’re filing. The next $1,300 or $1,350 is taxed at the child’s tax rate. Any unearned income above $2,600 or $2,700 is taxed at your rate.

You Can Report the Income on Your Tax Return

You can potentially skip filing that extra tax return for your child if their only income is unearned. This doesn’t mean that the income doesn’t have to be reported, but you can claim it on your own return instead. This, too, requires filing an additional form: IRS Form 8814. Their interest and dividend income and capital gains distributions can’t exceed $13,000 as of the 2024 tax year or $13,500 in 2025.

Several additional conditions must be met:

• Your child must be younger than age 19, or age 24 if they’re a full-time student.
• Neither you nor your child made any estimated tax payments toward the tax year in question. No tax refund was applied to any balance owed.
• Your child’s investment income wasn’t subject to backup withholding.
• Your child can’t otherwise file a joint return with a spouse.
• You’re the parent who’s qualified to claim this option, or you’re married to that parent and you’re filing a joint return.

You must either file a joint married return with the child’s other parent, or you had the higher taxable income if you opted to file separate returns. You’ll also qualify if you live separately from their other parent under the terms of a divorce judgment or separate maintenance decree.

Camp indicates that she’s never found any tax benefit in using this option. “I always file a separate return for the child when necessary,” she says. “This is only an option if all the criteria are met and the child has no W-2 income.”

The Bottom Line

The majority of a child’s more complex tax return obligations apply to unearned income, not wages. Preparing their tax return could be a nearly effortless yawn if you’re only reporting wages from a part-time, after-school job. Their employer has almost certainly withheld taxes from those earnings, so you’ll want to grab that money back for your child if they’re due a refund.

Consider using the services of a tax professional if your child has investments and you’re dealing with the kiddie tax, the alternative minimum tax, or the net investment income tax. You might want to tap one of the best tax software options instead if you’re just dealing with modest W-2 income.