Do I Add My Child’s W2 to My Taxes?

Parents often wonder how a child’s W-2 income impacts their own tax situation. Many mistakenly believe they need to add their child’s W-2 income to their personal tax return. However, a child’s W-2 income is generally reported on their own tax return, not the parent’s. Understanding tax rules for dependents and income types clarifies when a child needs to file and how their earnings might indirectly influence a parent’s tax benefits.

When Your Child Needs to File Their Own Tax Return

A child’s income can trigger a requirement for them to file their own federal income tax return. This obligation depends on the type and total amount of income earned, whether from wages or investments. For the 2024 tax year, a dependent child must file if their earned income exceeded $14,600. This threshold applies to wages, salaries, tips, and self-employment.

For unearned income, such as interest and dividends, a dependent child must file if their unearned income was more than $1,300 for 2024. If a child has both earned and unearned income, they generally must file if their gross income exceeds specific thresholds based on their earned income plus $450, or $1,300. These filing thresholds are tied to the limited standard deduction allowed for dependents.

The standard deduction for a dependent is the greater of $1,300 or their earned income plus $450, up to $14,600 for 2024. Even if a child’s income falls below these filing thresholds, it is often advisable to file a tax return if federal income tax was withheld from their wages. Filing allows the child to claim a refund for any overpaid taxes.

How Your Child’s Income Affects Your Dependent Claim

While a child’s W-2 income is not typically included on a parent’s tax return, their income level can affect a parent’s ability to claim them as a dependent. To be a “qualifying child” dependent, they must meet age, residency, relationship, and support tests. Under the support test, the child cannot have provided more than half of their own support for the year. This means a child earning significant income can still be a qualifying child dependent if they do not primarily support themselves.

Alternatively, a child who does not meet the “qualifying child” rules might still be claimed as a “qualifying relative” dependent. However, qualifying relative rules include a gross income test: the individual’s gross income must be less than $5,050 for 2024. If a child’s income, including W-2 wages, exceeds this amount, they cannot be claimed as a qualifying relative. Claiming a child as a dependent can enable parents to claim tax benefits, such as the Child Tax Credit (up to $2,000 per qualifying child for 2024) or the Credit for Other Dependents (up to $500).

Understanding the Kiddie Tax Rules

The “Kiddie Tax” prevents parents from shifting investment income to their children to take advantage of lower tax rates. This tax primarily applies to a child’s unearned income, including interest, dividends, and capital gains. A child’s W-2 income, considered earned income, is generally not subject to the Kiddie Tax.

For 2024, the Kiddie Tax applies if a child’s unearned income exceeds certain thresholds. The first $1,300 of unearned income is tax-free, and the next $1,300 is taxed at the child’s rate. Any unearned income above $2,600 is then taxed at the parent’s marginal tax rate, which is typically higher. If the Kiddie Tax applies, the tax is calculated on the child’s tax return using Form 8615, “Tax for Certain Children Who Have Unearned Income.”

In limited situations, parents may elect to include their child’s unearned income on their own tax return by filing Form 8814, “Parent’s Election To Report Child’s Interest and Dividends.” This election is only available if the child’s sole income is from interest and dividends, and their gross income is below $13,000 for 2024. Form 8814 is specifically for unearned income and does not allow parents to report their child’s W-2 income on their own tax return.