Dependent Child Tax
July 9th, 2007
When is a dependent child required to file a federal income tax return?
A dependent child must file a tax return if any one of the following applies:
- Unearned income was more than $850 (for 2006) or
- Earned income was more than $5,150 ($4,850 previously) or
- Gross income (total unearned and earned income) was more than the larger of:
- $850 ( for 2006) or
- Earned income was more than $5,150 ($4,850 previously) plus $300.
A dependent child that has gross income (unearned plus earned income) of $850 (for 2006) or less will not be taxed on that amount and does not have to file a tax return.
Who is responsible for filing the dependent child ’s tax return and paying the tax?
If a dependent child cannot file his or her own return for any reason, such as age, the child’s parent or guardian is responsible for filing a return on his or her behalf. If the child does not pay the tax due on this income, the parent may be liable for the tax.
A parent may take money out of the child’s UGMA / UTMA to pay the child’s tax liability. If the parent pays the tax out of the parent’s assets, the payment is considered an additional gift to the child.
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