Even if your parents claim you as a dependent on their tax return, you can still file your own return and, in some instances, you may be legally required to do so. If you worked, had interest or dividend income, or had federal income taxes withheld from income you received, you’ll want to review your filing requirements with the Internal Revenue Service. Even if you don’t have to file, you could still qualify for your own tax refund even if your parents claim you as their dependent.
Filing a Tax Return as a Dependent
Federal income taxes may be withheld from income you receive during the year. When income taxes are taken from you, the amounts are sent to the IRS as a credit toward income taxes you might owe on the money you received. Even if you don’t meet the income limits that require you to file a return, is worth the time to prepare a return.
Depending upon your particular situation, you may qualify for a refund on taxes you have already paid. You could also qualify for various credits and deductions based on your professional or educational status.
Read More: What Happens If You Don't File Taxes?
For most taxpayers, the deadline to file a return is April 15, but if you’re due a refund or do not owe any tax, you won’t be in trouble if you don’t file by this date. The IRS charges a penalty to those who owe tax and file late, but penalties are calculated as a percentage of what someone owes.
When you don’t owe any tax, the IRS doesn’t charge the penalty. Although you won’t be penalized for filing late when you’re expecting a refund, you’ll still want to file as soon as possible because the IRS only allows you three years to claim any refund you’re due.
Who Is Required to File – 2020 Tax Year
For the 2020 tax year, which you'll file in 2021, even if your parents claim you as a dependent, you'll need to file if you earn more than $12,400 in wages or more than $400 in self-employment income. You’ll also need to file if you receive more than $1,100 in interest, dividends or capital gains income, which is considered unearned income, or if the sum of your earned income plus $350, not to exceed $12,400, is greater than $1,100.
You may have interest income if you own bank accounts or bonds, and may have dividend income if you own stocks or similar investments. Capital gains are earned when you sell investments like stock or mutual fund shares. If you have any of these types of income, you might receive a Form W-2, a Form 1099-INT, a Form 1099-DIV or a Form 1099-B at the end of the year.
Read More: When Can You Get That Tax Refund?
Who Is Required to File - 2019 Tax Year
For the 2019 tax year, even if your parents claim you as a dependent, you’ll need to file if you earn more than $12,200 in wages or more than $400 in self-employment income. The standard deduction for unearned income such as interest and dividends is the same threshold for the 2019 tax year as it is for 2020 – more than $1,100 in unearned income or your earned income plus $350, not to exceed $12,200, whichever is greater.
Who is Required to File - 2018 Tax Year
For the 2018 tax year, a single person is required to file if her income exceeds $12,000; married couples are required to file if they will be filing a joint return and their combined income exceeds $24,000. Even if your parents claim you as a dependent, you must file a return if you meet this criteria.
You may be wondering, "If my parents claim me, do I lose money?" The answer depends upon your income, but the standard deduction in 2018 for a person who is claimed as a dependent is either his earned income plus $350, or $1,050, whichever is greater. A lower deduction means higher taxable income, which increases your tax bill and reduces any refund.
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- IRS: Publication 17 - Your Federal Income Tax
- Forbes: New: IRS Announces 2018 Tax Rates, Standard Deductions, Exemption Amounts And More
- EFile.com: 2019 Tax Return Filing Requirements
- IRS: About Form 1099-INT, Interest Income
- IRS: About Form 1099-DIV, Dividends and Distributions
- IRS: About Form 1099-B, Proceeds From Broker and Barter Exchange Transactions
- Nerdwallet.com: Standard Tax Deduction: How Much It Is in 2019-2020 and When to Take It
- MarketWatch: The Secure Act has a present for parents - the 'Kiddie Tax' is less painful
With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.