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How to File Your Child’s First Income Tax Return

How to File Your Child’s First Income Tax Return

February 28, 2024

Filing an income tax return for your child may be one of many things that come to mind when you think about their financial responsibilities. However, it's essential to introduce them to the world of taxation early on. Teaching your child how to file their first income tax return instills financial responsibility and helps them understand the importance of paying taxes and contributing to society.

This blog will walk you through the steps to file your child's first income tax return.

  1. Determine the Filing Requirement:
    The first step in filing your child's income tax return is determining whether they must file. Generally, if a child's income exceeds a certain threshold, they must file a tax return. This threshold can vary depending on their age and the source of their income. For example, in the United States, for the tax year 2023, a single dependent under the age of 65 must file a return if their unearned income (such as interest and dividends) is over $1,100 or if their earned income (such as wages from a part-time job) is over $12,550.
  2. Gather Necessary Documents:
    Before starting the filing process, you must gather all the necessary documents. This includes income statements, such as W-2 forms from employers or 1099-INT forms for bank interest income. If your child has investments, you'll need statements from brokerage accounts or other financial institutions.
  3. Choose the Filing Status:
    Your child's filing status depends on their circumstances. Most likely, they will be considered dependent on your tax return if they are under 19 or under 24 years old and a full-time student. However, they may file as independent taxpayers if they have substantial income and are financially independent.
  4. Choose the Appropriate Tax Form:
    The tax form your child should use depends on their income and filing status. The most common forms for individual taxpayers in the United States are the 1040, 1040A, and 1040EZ. Your child may be eligible to use the simplified 1040EZ form if their income is below a certain threshold and they meet specific criteria.
  5. Complete the Tax Return:
    Could you help your child complete the tax return form accurately? They must enter their personal information, income details, deductions, and credits if applicable. Please be sure to look over all the information to avoid any errors.
  6. File Electronically or by Mail:
    Once the tax return is completed, your child can file electronically using tax software or file it on paper by mailing the forms to the appropriate tax authority. Many people choose to e-file because it's faster and more convenient.
  7. Understand Payment or Refund:
    Depending on your child's income, they may owe taxes or be eligible for a refund. If they owe taxes, ensure they understand the payment deadline and how to pay. They can receive a refund by direct deposit or as a paper check if they're owed a refund.
  8. Keep Records:
    Please encourage your child to keep copies of their tax return and supporting documents for at least three years. This will be useful in case of any audits or questions from tax authorities.

Filing your child's first income tax return is an excellent opportunity to teach them about financial responsibility and the importance of paying taxes. By following these steps and involving them in the process, you'll help set them on the path to financial literacy and responsible tax management.

Consult with a tax professional or use tax software to ensure accuracy and compliance with current tax laws and regulations.