Have dependent student 18, in college, earned under $5000. How do I include dependent's income in my return to decide if it increases or reduces overall tax return?

[fictionwriter244]

Trying to determine what impact including dependent's income with my tax return will have on the overall tax return.

[fictionwriter244]

Clarification...how do I edit Turbo Tax or where do I go in Turbo Tax to include dependent's income?

[Hal_Al · Accepted solution]

You do not report his/her income on your return. It is not optional. So there is no need (or place in Turbotax*) to enter his income.

If it has to be reported at all, it goes  on his own return. If your dependent child is under age 19 (or under 24 if a full time student), he or she must file a tax return for 2015 if he had any of the following:

1.         Total income (wages, salaries, taxable scholarship etc.) of more than $6,300 (2015).

2.         Unearned income (interest, dividends, capital gains) of more than $1050 (2015).

3.         Unearned income over $350 and gross income of more than $1050

4.         Household employee income (e.g. baby sitting, lawn mowing) over $1900 ($6300 if under age 18)

5.         Other self employment income  over $400

 Even if he had less, he is allowed to file if he needs to get back income tax withholding. He cannot get back social security or Medicare tax withholding.

 He doesn’t get his own $4000 exemption (deduction), when he files. In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section.

*If his only income is from interest and dividends, Alaska PFD or capital gains distributions shown on a 1099-DIV, there is a provision for entering it on your return, using form 8814. Enter at Less common income / Child's income.

But, even then, it is usually best for him to file a separate return, as qualified dividends and capital gain distributions could be taxed at a higher rate on the parent's return. 

[fictionwriter244]

Hal_Al.....Thank you soooo much for your reply!  It was very helpful!

[kbstallings]

Can you direct to IRS sources to back up #4 household employee-regarding how much a full time student under 18 can earn babysitting (lawn mowing etc.) under the under 18/Household Employee rules? 

I am getting told that my kid needs to claim as self employment if above $400, and thus pay self employment tax. But I don't think that is right--because, if household employees/w2 are excluded from paying SS/Medicare IF under 18/full time students why should self employed (non w2/non1099) teenagers under 18 be paying?  I can find the rules that apply to W2 household employees under 18/students, but not those that are typical teen babysitters under $600 per family, multiple families.  

Also, if this is typical date night babysitting and not a "nanny" job --is it still supposed to be entered under Misc. Income non W2 Household?  Or, where should it be entered?