The IRS lets you take a deduction for people who live with you and receive support from you, even if they have their own income. The IRS has two sets of rules for how much income is allowed for dependents based on whether a dependent is a qualifying child or a qualifying relative.
Tips
If the dependent is a qualifying child, then you can claim him or her regardless of earnings. For the 2020 tax year, other qualifying relatives need to make under $4,300 a year to be claimed as dependents.
How Much Can a Dependent Make?
The IRS recognize many types of child/parent relationships, including biological, adopted and foster as well as step children and siblings. In order to qualify as a dependent, a child must be age 18 or younger at the end of the current tax year (or under age 24 if a student) and have lived with you for at least half the year. As long as these requirements are met, a qualifying child can have any amount of income and still be claimed as your dependent.
Relatives who qualify as dependents must have had more than half their support provided by you and must be related to your or have lived in your household for the entire year. A child who does not meet all the requirements for qualifying child may be claimed as a qualifying relative. However, qualifying relatives must earn less than a maximum income level in order to qualify as dependent. For 2020 tax returns, the maximum income level for qualifying relatives is $4,300.
Read More: Claiming Dependents for Your Taxes
Minimum Income to File Taxes
Qualifying children and relatives who are claimed as dependents but have their own income may still be required to file their own tax returns if their income exceeds a specified amount. Even if a dependent is not required to file, they may want to file in order to recover money withheld for federal taxes. Parents have the option of including their dependent child’s income with their own when they file their return, unless that income exceeds the IRS threshold for dependents.
2019 Tax Law
If you are filing a late return for the 2019 tax year, your dependents who were younger than 65 and not legally blind must file a return if their income from wages exceeded $4,200 or if their unearned income was more than $1,100. In addition, dependents must file if their gross income was greater than the larger of $1,100 or their earned income plus $350.
References
- IRS: About Publication 501, Exemptions, Standard Deduction, and Filing Information
- IRS: About Publication 17, Your Federal Income Tax (For Individuals)
- Policy Genius: Who Can I Claim as a Dependent and Why Would I Want To?
- Forbes: IRS Announces 2019 Tax Rates, Standard Deduction Amounts and More
- TurboTax: Rules for Claiming a Dependent on Your Tax Return
- IRS. "Qualifying Child Rules." Accessed Oct. 9, 2020.
- IRS. "Publication 501 (2019), Dependents, Standard Deduction, and Filing Information." Accessed Oct. 9, 2020.
- IRS. "Dependents." Pages 8-9. Accessed Oct. 9, 2020.
- IRS. "Qualifying Child of More Than One Person." Accessed Oct. 9, 2020.
- Tax Foundation. "2020 Tax Brackets." Accessed Oct. 9, 2020.
- Tax Foundation. "2019 Tax Brackets." Accessed Oct. 9, 2020.
Writer Bio
Catie Watson spent three decades in the corporate world before becoming a freelance writer. She has an English degree from UC Berkeley and specializes in topics related to personal finance, careers and business.