What Is the Standard Deduction if You Are a Dependent?

Taxes can be confusing, especially for dependents who may not realize they have different rules to follow. The standard deduction plays a key role in determining whether a dependent needs to file a tax return and how much of their income is taxable.

Filing Thresholds for Dependents

A dependent’s filing requirement depends on their income type and total earnings. The IRS sets specific thresholds based on earned, unearned, or combined income.

For 2024, a single dependent with only earned income must file a return if they make more than $14,600, which matches the standard deduction for single filers. If a dependent has more than $1,250 in unearned income—such as interest, dividends, or capital gains—they must file a return, even if they have no earned income.

When a dependent has both earned and unearned income, the filing threshold is the greater of $1,250 or their earned income plus $400, up to the $14,600 standard deduction. For example, a dependent with $5,000 in earned income and $1,500 in unearned income must file a return because their total income exceeds the calculated threshold.

Standard Deduction Calculation

The standard deduction for dependents in 2024 follows a specific formula rather than a fixed amount. It is the greater of $1,250 or earned income plus $400, but it cannot exceed the $14,600 standard deduction for single filers.

For example, a dependent earning $3,000 would have a standard deduction of $3,400 ($3,000 + $400), as this is higher than the $1,250 minimum. If they earned $15,000, their deduction would be capped at $14,600. This structure ensures dependents receive a deduction based on their earnings but not more than independent taxpayers.

Earned Income Rules

Earned income includes wages, salaries, tips, and self-employment earnings. Unlike unearned income, it is subject to payroll taxes such as Social Security and Medicare, which are automatically withheld from most paychecks.

For dependents with traditional jobs, taxes may be withheld, but if their earnings are below the standard deduction, they can receive a full refund of any federal income tax paid. However, self-employed dependents must pay self-employment tax if their net earnings exceed $400. This tax, covering Social Security and Medicare, is 15.3%, though business expense deductions can lower taxable income.

Unearned Income Rules

Unearned income comes from sources like interest, dividends, capital gains, taxable scholarships, and trust distributions. It is taxed differently from earned income and may be subject to the “kiddie tax” under Internal Revenue Code 1(g).

If a dependent’s unearned income exceeds $2,500 in 2024, the excess is taxed at their parent’s rate instead of their own. This rule prevents families from shifting investment income to children to take advantage of lower tax brackets. For example, if a dependent earns $4,000 in unearned income, the first $1,250 is covered by the standard deduction, the next $1,250 is taxed at the dependent’s rate, and the remaining $1,500 is taxed at the parent’s rate.

Combining Earned and Unearned Income

When a dependent has both earned and unearned income, the IRS uses a specific formula to determine their filing requirement and standard deduction. A return is required if total income exceeds the greater of $1,250 or earned income plus $400.

For example, a dependent earning $6,000 from a part-time job and receiving $2,000 in interest would have a standard deduction of $6,400 ($6,000 + $400). Since their total income is $8,000, the remaining $1,600 is taxable. Additionally, because their unearned income exceeds $1,250, they must file a return. If their unearned income surpasses $2,500, the kiddie tax applies, meaning a portion of their investment earnings is taxed at their parent’s rate.