The day will come, if it hasn’t already, when your son sets out to join the work force. Most likely his first employment will be a summer or after-school job. The first paycheck will introduce your son to payroll withholding and the reality of paying taxes. Rest assured your son can file taxes if you claim him as a dependent. In fact, he may be required to under Internal Revenue Service regulations.
When you claim your son as a dependent, you get an exemption. This lowers your taxable income and reduces your tax liability. However, your son may not claim a personal exemption as long as he is claimed as a dependent. Your son may have to file an income tax return if he earns enough money, although this won’t necessarily affect your ability to claim him as a dependent.
Many young people who are dependents are students. For the most part, income for students is the same as it is for anyone else. That is, taxable income includes wages and tips, investment income and self-employment earnings. If your son is receiving grant or scholarship money as part of a financial aid package for school, some of it may be considered income as well. In general, grant and scholarship money used for direct educational expenses like tuition and books is tax-free. If your son uses these funds for other purposes such as living expenses, they become taxable income.
If your son has earned income of at least $5,700 or unearned income of $950 (figures for the 2010 tax year) he must file a tax return. Filing is also necessary if he earns $400 or more from self-employment or at least $108.28 from church employment. If his employer withholds taxes from his paycheck, he may want to file voluntarily in order to get any tax refund he may be entitled to.
Once a child starts working, it is important to be aware of his employment earnings to be sure he continues to qualify as a dependent, or to adjust your own tax return if not. According to the IRS, a qualifying child must be under age 19, or under age 24 if a full-time student. If he is disabled there is no age limit. He must reside with you at least half of the year, and you must provide at least half of his support. Finally, he is not qualified as a dependent if he files a joint tax return unless it is filed simply to claim a refund.