Parents and other heads of household claim children on their tax return because it reduces their tax liability and so reduces the amount they must pay the IRS or increases the amount of their refund. However, teens with earned income are still able to file their own tax returns, even if a parent or guardian claims them as a dependent.
What Makes a Dependent?
Whether or not teens can be claimed as dependents actually has little to do with how much money they made or whether they have to file. Rather, it has to do with the financial relationship between the teen and the head of household. So long as the teen is the child, stepchild, sibling, nephew or niece of the head of household (or their offspring), and the child is financially dependent on the head of household for over half of her support during the year, she can be claimed -- regardless of whether she files her own return. Teens who are over the age of 19, however, may not be claimed as dependents unless they are full-time students under age 24 or permanently and totally disabled.
Filing Rules for Dependents
Even if a teen is being claimed as a dependent, he may want to file in hopes of being refunded some of the tax money withheld by the federal government. However, he cannot claim himself as an exemption, because he is already being claimed by another, and this will reduce the amount of money in his refund. In certain situations, a teen may have to file his own tax return, even if he is being claimed as a dependent by someone else. Teens with summer or school-year jobs who earned more than $5,700 in a year, or those who received over $950 of unearned income, are legally required to file their own tax returns with the IRS.