Minors are generally dependent on their parents' or guardians' income tax return. But they may also have to file their own federal tax return in some cases. Some minors may be too young to prepare their own tax return, and sometimes the duty falls to the parents to prepare the child's tax return for them. Not all minors must pay taxes, however, and the Internal Revenue Service (IRS) has specific rules defining when and if a minor must file.
Calculate gross income. Gross income includes income of the minor from all sources. This is generally earned income and investment income. The total income is the determining factor related to how the return is filed. Investment income over a specified amount causes the minor's income to be taxed at the parents' rate and included on the parents' return on Form 8615 rather than on the minor's personal return.
Determine if the minor's investment income requires her income to be included on her parents' return. If not, determine if the minor's income is high enough to require her to file her own return. If so, option one is to include all income of the minor on her own personal return. Option two is to include the minor's income on the parents' return on Form 8814. This can only be done if the minor's income is only from interest and dividends, including capital gain distributions that total less than $9,500; she did not pay estimated tax payments; she did not have a prior year's overpayment applied to the current year; and she did not have federal tax withholding.
Omit the personal exemption of the minor on his personal return when filing a separate return for the minor. Because the parent is entitled to claim the dependency deduction for the minor, the minor is not entitled to his own personal exemption.
Calculate the standard deduction according to the rules for a dependent. Dependents are not entitled to the same standard deduction as a single filer who claims his own dependency exemption.
Calculate the tax based on the taxable income from the appropriate IRS tax table. Also be sure to enter and subtract any taxes withheld from any income earned or received by the minor. The resulting balance is the refund or amount due.
Sign and date the return. Technically, the minor is responsible for filing his tax return and for payment of tax and any penalties and interest. If a minor is unable to file her own return for any reason, such as age or disability, the parent or guardian is responsible for filing and payment. If a minor is unable to sign her own return, the parent or guardian should sign the minor's name on the signature line.
- Internal Revenue Service: Publication 929 Tax Rules for Children and Dependents
- Fidelity. "Children." Accessed May 28, 2020.
- U.S. Department of Health & Human Services. "Intestate Inheritance Rights for Adopted Persons," Page 1. Accessed May 28, 2020.
- Social Security Administration. "SI BOS01120.205 Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA)." Accessed May 28, 2020.
- Utah Courts. "Conservatorship of a Minor." Accessed May 28, 2020.
Kate Woods has been writing professionally for 10 years. Her articles appear on Ehow.com, Bellaonline.com and in The PennWriter. Woods has extensive experience as a Tax Preparer, Office Manager, and expertise acquired from many creative endeavors. She holds IRS Enrolled Agent Certification and attended WCCC in Pennsylvania.