Tax season brings up all kinds of questions. Maybe your teen, whom you claim as a dependent on your return, happily earned a few hundred or a few thousand dollars last year. Should she file her own tax return?
The experts weigh in.
KNOW THE RULES: Generally, a dependent needs to file a 2013 federal income tax return if his earned income was more than $6,100, his unearned income was more than $1,000, or his gross income was more than his income (up to $5,750) plus $350, explains Benjamin Sullivan, a certified financial planner with Palisades Hudson Financial Group in Scarsdale.
REVIEW THE W-2: "If there is something in box 2 (federal tax withheld) or box 17 (state income tax withheld), they should consider filing a return," says Wendy Valentino, CPA and principal with Cohen Greve & Co. in Mineola.
Be sure, however, that your child indicates she is a dependent on another return. Otherwise, the return could get kicked out, Valentino warns. Most likely, even as a dependent, she will get at least a partial refund of withholdings.
SHARE A TEACHABLE MOMENT: "I love the idea of teens filing their own tax returns. It's a great way for them to learn about finance," says Jonathan Gassman, CPA with Gassman Financial Group in Manhattan. "Teaching them about taxes and finance puts them on the right track. Use this as an opportunity to budget, or better yet, create a spending plan. If they're getting a refund, also teach them about saving money."