What Is A Dependent?
In tax terms, a dependent is a person who is reliant upon another person as means of supporting themselves financially. A good example of a financial dependent would be a child, who relies on the financial support of a guardian.
A person who has a dependent living off of their financial income is entitled to claim a dependency exemption when they file their tax return.
This will be granted should the dependent meet the qualifying criteria set out by the Internal Revenue Service (IRS), the governing taxation authority in the United States.
This taxpayer who has a dependent can also use their status to apply for certain tax credits.
Who Can Be A Dependent?
A person can be classified as a dependent if they are a qualifying relative of the taxpayer in question, such as their child. A person who is considered a dependent may not claim any other persons as a dependent if they file their own tax return.
Three tests must be met for any person to be a dependent. They are:
- The dependent taxpayer test
- Joint return test
- Citizen or resident test
A married couple filing a joint tax return cannot claim any dependents.
A dependent must be a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico.
Do I Include My Dependent’s Income On My Own Tax Return?
Normally if a dependent is required to file a tax return (more on that below) then they will have to file it as their own tax return, separate entirely from the person they are dependent on. There are of course exceptions to this.
If your dependent is unable to file their own tax return (if they are a small child for example) then you bear the responsibility of completing their tax return and filing it on their behalf.
A dependent will have to file a tax return if they meet certain criteria, underlined further below:
Do I Need To File Taxes As A Dependent?
If you’re a dependent, you will still need to file your own tax return if your income meets certain criteria set by the IRS.
Income can be defined as:
- Earnings from salary, wages, tips, fees for professional services, scholarships and fellowship grants.
- Unearned income: Taxable interest, dividends, capital gain distributions, unemployment compensation, and taxable social security benefits, pensions, and annuities.
- Gross income is the totals of both.
What Are The Criteria For Filing Taxes As A Dependent?
No matter whether you are a single or married dependent under the age of 65.
You must file a tax return if any of the following are true for yourself.
- Your unearned income exceeds $1,100
- Your earned income exceeds $12,200
- Your Gross income exceeds $1,100 or you have an earned income up to $11,850, plus $350
- Your Gross income exceeds $5 while you also have a spouse, who has filed a separate return with itemized deductions.
If you are a single dependent over the age of 65, you will have to file taxes if any of the following applies to you:
- Your unearned income exceeds $2,750 ($4,400 if you are over 65 and legally blind)
- Your earned income exceeds $13,850 ($15,500 if you are over 65 and legally blind)
- Your gross income exceeds $2,750 (or $4,400 if you are over 65 and legally blind)
If you are a married dependent over the age of 65, you will need to file taxes if any of the following applies to you:
- Your unearned income exceeds $2,400 ($3,700 if you are over 65 and legally blind)
- Your earned income exceeds $13,500 ($14,800 if you are over 65 and legally blind)
- If your gross income exceeds $5, while you also have a spouse who filed a separate return and itemized deductions
- Your Gross income exceeds $2,400 (or $3,700 if you are over 65 and legally blind), or you have an earned income up to $11,850 plus $1,650 (or $2,950 if you are over 65 and legally blind)
Even if you don’t fit any of the criteria for paying taxes, you may still wish to file a tax return. By doing so, you will receive any state or federal taxes you are due back which were previously withheld.
Oftentimes full tax amounts are taken regardless of the status of the person being collected from.
A child’s summer job income may be taxed by the IRS, even if it should fall below a certain threshold. In this case, the way to have that withheld income returned to the child would be for the child to file a tax return.
They could also apply for certain credits at the same time, such as the earned income credit.
When You Can Include A Dependent’s Income On Your Tax Return?
Even though to you it may seem like it makes more sense to report your dependent’s earnings in your own tax return, the IRS does not allow this and is strict in enforcing it.
A child who receives a W-2 from working, they may already be paying social security. A parent may only claim on a child’s investment income.
If the child is younger than 19, or is a full-time student younger than 24, and their only source of income is an interest of dividend income of less than $10,500, then that child’s unearned income may be included within the parent’s income upon the parent’s tax return.
This is the government enforcing what has come to be referred to as the kiddie tax, and is designed to prevent adults sheltering taxable earnings by placing it in a child’s name.