Q. Please advise if she needs to file her own income tax return ?
A. No. Her income is low enough that she is not required to file a tax return.
Q. Or do I add her income to my income?
A. No. That is (almost) never done. See below for minor exception.
You do not report his/her income on your return. 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 2021 if he had any of the following:
- Total income (wages, salaries, taxable scholarship etc.) of more than $12,550 (2021) or $12,950 (2022).
- Unearned income (interest, dividends, capital gains, unemployment, taxable portion of 529 distribution) of more than $1100 ($1150 for 2022)
- Unearned income over $350 ($400 for 2022) and gross income of more than $1100 ($1150 for 2022)
- Household employee income (e.g. baby sitting, lawn mowing) over $2300 ($12,950 if under age 18)
- Other self employment income over $432, including money on a form 1099-NEC
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.
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.
