(NEXSTAR) – With tax season approaching, there’s been a lot of talk about the Child Tax Credit and the impact it will have on your tax return. Although your dependent children can help you with your tax refund, you can also help them get a refund.
If you have a child who is under 19 for the entire tax year (or 24 if a full-time student), you can claim them as a dependent if they have lived with you for more half of 2021 and you provide more than half of their financial support. (Those who cannot be claimed as a dependent will have the same tax reporting obligations as any other adult.)
Dependent children who were employed in 2021 may still have to file their own taxes, even if you can claim them. If he earned $12,550 in income, your child will need to file a tax return, according to Mark Steber, director of tax information for Jackson Hewitt Tax Services.
“If they had a job – big job, little job, new job, whatever – if there were tax deductions, they can’t get that money back unless they file a tax return,” Steber told Nextstar. “And so if your child worked during the summer and made $1,000 or $5,000 or whatever the number, chances are he had a tax deduction and that withholding tax authorities, federal and state, can’t get that money back unless they file a tax return.”
The same goes for all of your dependents who are in college, says Lisa Greene-Lewis, CPA and tax expert at TurboTax.
“Every year, [the IRS] brings in over $1 billion in unclaimed refunds and much of it belongs to students who don’t think they should file,” she explains.
If your child receives income from sources other than employment, such as interest, dividends, and other unearned income, the filing rules change. Once the total of this income your child received in 2021 exceeds $2,200, they may be subject to a specific tax, according to the IRS.
If the only income your child had in 2021 is interest and dividend income, and the total is less than $11,000, you may be able to include that income on your return rather than filing a separate return. .
Ultimately, if you’re unsure whether your child should file their own return, Steber and Greene-Lewis suggest talking to a tax professional.