What Is the Standard Deduction Worksheet for Dependents?
A dependent's standard deduction follows special rules. Learn to calculate the correct amount based on their income to ensure an accurate tax return.
The standard deduction is a specific dollar amount that taxpayers can subtract from their adjusted gross income (AGI) to reduce their overall taxable income. This deduction simplifies the tax preparation process by eliminating the need to itemize deductions. The amount of the standard deduction is determined by the taxpayer’s filing status and is subject to annual inflation adjustments by the Internal Revenue Service (IRS). For the 2024 tax year, the standard deduction for a single individual is $14,600.
Filing Requirements for a Dependent
Before considering the standard deduction, it is necessary to determine if a dependent is required to file a federal income tax return. The requirement to file is based on the dependent’s gross income, which includes all income received that is not exempt from tax. The specific thresholds that trigger a filing requirement depend on the type of income the dependent has received: earned, unearned, or a combination of both.
For the 2024 tax year, a dependent must file a return if their earned income, such as wages from a job, exceeds $14,600. If the dependent only has unearned income, like interest from a savings account or dividends, the filing threshold is much lower. A return is required if unearned income is more than $1,300 for the 2024 tax year.
The rules become more complex when a dependent has both earned and unearned income. In this situation, a dependent must file a tax return if their gross income is more than the greater of two amounts: $1,300, or their total earned income plus $450, up to the maximum of the regular standard deduction. For example, if a dependent has $600 in earned income and $1,000 in unearned income, their gross income is $1,600. They must file a return since this is greater than their earned income plus $450 ($1,050).
Information Needed to Complete the Worksheet
To accurately calculate a dependent’s standard deduction, specific financial figures must be gathered before starting the worksheet. The first piece of information required is the dependent’s total earned income for the tax year. Earned income includes salaries, wages, and tips, and this information is found on Form W-2, Wage and Tax Statement.
Next, you must determine the dependent’s total unearned income. This category includes income that is not generated through direct labor, such as taxable interest, ordinary dividends, and capital gain distributions. Unearned income is reported on various versions of Form 1099, such as Form 1099-INT for interest income and Form 1099-DIV for dividends.
The final piece of information needed is a specific dollar amount set by the IRS for the tax year, which is added to the dependent’s earned income as part of the calculation. For the 2024 tax year, this amount is $450. This figure is provided directly within the instructions for Form 1040 and on the Standard Deduction Worksheet for Dependents.
Calculating the Dependent’s Standard Deduction
The “Standard Deduction Worksheet for Dependents,” found within the instructions for Form 1040, provides a structured method for determining the correct deduction amount. The calculation begins by entering the dependent’s total earned income on the first line of the worksheet. This figure serves as the base for the subsequent steps.
The second line of the worksheet requires you to enter a specific dollar amount provided by the IRS, which is $450 for the 2024 tax year. On line three, you will add the amount from line one (earned income) and the amount from line two ($450) together.
The subsequent lines involve a series of comparisons. On line four, you enter the minimum standard deduction amount for a dependent, which is $1,300 for 2024. Line five requires you to enter the maximum standard deduction for the dependent’s filing status, which is the single filing status amount of $14,600 for 2024.
Finally, on line six, you will enter the larger of the amounts from line three or line four, but not more than the amount on line five. This resulting figure is the dependent’s standard deduction, which is then entered on the designated line of their Form 1040.
For example, consider a dependent with $3,000 of earned income. Adding $450 results in $3,450. Since $3,450 is greater than the $1,300 minimum and less than the $14,600 maximum, their standard deduction is $3,450. If another dependent had only $200 of earned income, adding $450 gives $650. In this case, the dependent’s standard deduction would be $1,300, because the minimum amount is greater than their calculated earned income plus $450.