Dependent Children Working and Filing Tax Returns
Getting that first part-time job can be an exciting time for your teen-aged children. I get quite a few questions from tax clients about their dependent children starting their first job, ie – how should they fill out their W-4 forms, do they need to file a tax return, etc.
In many cases, the dependent child can prepare their W-4 form and claim exempt. As long as the income expected to be earned during the calendar year is less than $6,200, which is typical for many part-time jobs, the W-4 can be filled out claiming exempt from Federal income taxes with no adverse impact. This accomplishes 2 goals.
- With no income tax being withheld, there is no need to file a tax return the following year just to get a refund of income taxes paid in because no income tax was withheld.
- Prevents the scenario where a dependent child prepares his or her return and inadvertently claims themselves as a dependent. This creates a problem with the parents’ file later on when they try to claim this child as a dependent. Their return will not be processed because a return has already been filed claiming that social security number as a dependent. Getting everything straightened out in this situation can be very time-consuming.
My advice is that whenever possible, have your dependent children claim exempt on W-4 form, and, if a return is required, be sure your dependent children do not claim themselves as a dependent on their return.
As with any tax issue, not all situations are alike, so please contact me in the Des Moines office with any specific questions related to your individual situation.
