Do You Have to File Taxes Under 18 as a Dependent?

Filing taxes as a minor can be confusing, especially when you’re claimed as a dependent on someone else’s return. Many young people assume they don’t need to file, but tax laws set specific rules based on income type and amount.

Income Thresholds for Minors

The IRS sets income thresholds that determine whether a minor must file a tax return. These thresholds change annually based on inflation. For 2024, a minor must file if their total income exceeds the standard deduction of $14,600. If a minor earns less than this amount solely from wages, they typically do not need to file. However, different rules apply for self-employment and investment income.

Minors earning income through self-employment must file if their net earnings exceed $400, even if their total income is below the standard deduction. Investment income, such as interest, dividends, and capital gains, has its own filing thresholds. If a minor’s unearned income exceeds $1,250, they must file. If it surpasses $2,500, it may be taxed at the parents’ marginal tax rate under the “kiddie tax” rules, which prevent parents from shifting large amounts of investment income to their children to take advantage of lower tax brackets.

Even if a minor’s income is below the filing threshold, filing a return can be beneficial. Employers withhold federal income tax from paychecks, and the only way to receive a refund of those withheld taxes is by filing. Some tax credits, such as the Earned Income Tax Credit (EITC), may also be available depending on income and filing status.

Earned vs. Unearned Income

The IRS distinguishes between earned and unearned income when determining tax obligations for minors. Earned income comes from work, such as wages or self-employment, while unearned income includes passive sources like interest and dividends.

For minors earning wages, taxes are typically withheld from each paycheck. If too much is withheld, they may be eligible for a refund. Tips must also be reported, and if total earnings exceed the standard deduction, a tax return is required. Self-employed minors, such as freelancers or those running a small business, must also pay self-employment tax, which covers Social Security and Medicare contributions.

Unearned income follows different tax rules. If a minor receives more than $1,250 in unearned income in 2024, they must file a return. If unearned income exceeds $2,500, the “kiddie tax” applies, taxing the excess at the parents’ tax rate. This affects income from savings account interest, stock dividends, and capital gains.

Dependent Status Impact

Being claimed as a dependent affects filing requirements, deductions, and eligibility for certain credits. The IRS defines a dependent as either a qualifying child or a qualifying relative, with specific criteria determining whether a taxpayer can claim another person.

A dependent minor’s standard deduction is limited to their earned income plus $400, up to a maximum of $14,600 for 2024. This impacts how much taxable income they report. Dependents cannot claim certain tax credits, such as the Earned Income Tax Credit (EITC), which is only available to independent filers. Education-related tax benefits, such as the American Opportunity Credit, go to the parent or guardian who claims the dependent, even if the minor pays some of their own tuition.

Health insurance considerations may also arise. If a minor earns enough to purchase their own health plan through the marketplace, their dependent status can influence eligibility for premium tax credits. Household income determines subsidies, so earnings reported on a dependent’s return could affect financial assistance for the family.

Claiming a Refund

Many minors have federal taxes withheld from their paychecks, even if their total earnings fall below the filing threshold. Since withholding is based on estimated annual earnings, employers may deduct more than necessary, especially for part-time or seasonal workers. Filing a tax return is the only way to recover any overpaid taxes.

Refunds can also result from refundable tax credits, such as the Additional Child Tax Credit (ACTC) or excess Social Security tax withholding. If a minor works multiple jobs, each employer withholds payroll taxes without considering total earnings across all jobs, sometimes leading to overpayment. If Social Security tax exceeds the annual limit—6.2% of wages up to $168,600 for 2024—a refund can be claimed by filing Form 1040 and attaching Schedule 3.

Penalties for Non-Filing

Failing to file a required tax return can lead to financial consequences. The IRS imposes penalties based on the type of tax owed and the length of time the return remains unfiled. Minors with no tax liability generally face no penalties for not filing, but those who owe taxes may be subject to late filing and late payment penalties. The failure-to-file penalty is 5% of the unpaid tax per month, up to a maximum of 25%. If taxes remain unpaid, an additional failure-to-pay penalty of 0.5% per month applies, also capped at 25%.

Interest accrues on unpaid taxes from the original due date until the balance is paid. The IRS calculates interest based on the federal short-term rate plus 3%, adjusted quarterly. If a minor earns self-employment income and fails to file, they may also owe self-employment tax, which funds Social Security and Medicare. In cases of prolonged non-compliance, the IRS can issue a substitute return based on available income data, often resulting in a higher tax bill. Filing on time, even without the ability to pay immediately, helps minimize penalties and interest.