It depends on what kind of income your child has to report. If they have a W-2 and need to file a return to get a refund of federal taxes that were withheld, they would need to file their own return.
If they had unearned income, like interest and dividends, that is greater than $1,100 they need to file a return. If it's less than $1,100, it doesn't need to be reported anywhere.
However you, as the parent, can elect to report your child's interest income on your return so that the child does not have to file their own return. This is done using Form 8814.
You can make this election if your child meets all of the following conditions.
- Your child was under the age of 19 or a college student under the age of 24, and,
- Had investment income (interest, dividends, and capital gains distribution) of less than $11,000 for the year, and,
- Had no earned income from wages, salary, and tips, or other types of taxable income.
However, depending on your tax bracket, it may be more beneficial to have your child file their own return. Be sure on the child's return to check the boxes:
- they can be claimed on someone else's return; and
- they are being claimed on someone else's return
This is very important because you want to claim them on your return
While they wouldn't get an exemption (because you are claiming them as a dependent), they would probably receive a standard deduction of $1,100 to reduce the taxable amount.
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