Updated for tax year 2025.
Your child has started earning their own money, but you’re still claiming them as a dependent on your federal income tax return. How will this situation affect your taxes?
One of the most common tax questions parents have is whether they should report their dependent child’s W-2 form on their income tax return or if the child should file their own return. Here’s what you need to know before you file taxes this year.
Should my child file their own tax return?
You cannot report your child’s Form W-2 on your tax return. If your child has earned income during the tax year, they must file a separate return for their W-2 income to either receive a tax refund or pay any balance owed to the IRS.
However, even if your child must file separately, you can still claim them as a dependent on your taxes if they meet the criteria of a qualifying child. When your child files (or you file a separate return for your child), they will simply need to indicate that they can be claimed as a dependent on someone else’s return (a.k.a. your return).
Is my child required to file taxes?
Most taxpayers only need to file an income tax return if their gross income exceeds the standard deduction. For the 2025 tax year, that threshold is $15,750 for a single filer.
But there are certain situations where your dependent child may still need to file their own tax return, even if their income is below that amount:
- If your child’s W-2 income (earned income) is under the standard deduction amount, they typically don’t need to file. But if they had taxes withheld from their paycheck, they might want to file to receive a potential tax refund.
- If your child earned more than $400 from self-employment — like babysitting, lawn mowing, or online freelance work — they must file a separate return and may owe self-employment tax.
- Children who earn income from both W-2 jobs and self-employment may also need to file an income tax return if their combined gross income exceeds the standard deduction for their filing status.
- If your child has unearned income, such as dividends, capital gains, or interest, different filing requirements apply depending on the amount of the income.
- If Social Security or other taxable benefits were received, those may affect their overall tax situation.
For more information on your child’s tax filing requirements, check out Tax Basics for Teens: Filing Your First Tax Return.
How do I know if my child qualifies as a dependent?
For your child to qualify as a dependent, they must meet the following IRS requirements:
- They must be your son, daughter, stepchild, eligible foster child, brother, sister, half-sibling, stepsibling, or a descendant of any of them (your niece or nephew, for example).
- They must be under 19 years old (or under 24 years old if they are a full-time student). If they were permanently disabled at any time during the year, there is no age threshold.
- They must have lived with you for more than half of the year. Exceptions include the child being temporarily away at college, in the hospital, or in juvenile detention.
- They must get more than half of their financial support from you during the year.
- They must be younger than you unless they are disabled.
- They must be a U.S. citizen, U.S. national, resident alien, or a resident of Canada or Mexico.
- The child must not be claimed as a dependent by someone else (there are rare exceptions). The child also cannot claim a dependent on their own tax return.
Can I claim my child’s investment income on my tax return?
Yes, parents can sometimes claim their child’s investment income on their tax return. Investment income, such as interest, dividends, or capital gains, counts as unearned income under IRS tax law, and special rules apply to taxpayers who report it.
If your dependent child has unearned income, you can typically choose to report it on your return or your child’s return. However, if your child’s unearned income totals $1,350 or more (in 2025), it must be reported separately on your child’s own return.
Remember, if your child has earned income, they will still need to file a separate return even if you’re reporting the child’s investment income on your return. If the child doesn’t have any earned income and you include their unearned income on your return, the child will not have to file a return.
The bottom line
Helping your child file their own income tax return is a great way to teach real-world tax basics while keeping your family’s tax situation compliant with IRS rules. Whether they earn W-2 income, have unearned income from investments, or do self-employed gig work, understanding filing requirements and tax deductions early can set them up for future success.
Unsure what type of income your child has or which tax credits you or they might qualify for? You don’t have to be a tax pro to DIY your taxes. Try out TaxAct’s easy-to-use tax software and e-file with confidence this tax year. You can also consult credentialed tax experts during the tax preparation process with us by adding Xpert Assist to your return.*
This article is for informational purposes only and not legal or financial advice.
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* Tax Experts are available with TaxAct® Xpert Assist®, which encompasses a suite of services designed to provide varying levels of support and assistance for your tax filing needs. These services are available at an additional cost and are subject to limitations and restrictions. Service availability, features, and pricing may vary and are subject to change without notice. For more details, read full terms.
