Dependent son taxable income

[Faminghan]

Our college son made a few hundreds working on campus. we claim him as dependent. How do we report his income? Last year he had a couple of hundred dividend income and Turbox tax instructions was no need to report it if it is below the threshold of $1500(don’t remember the exact number). We plan to put his income into his IRA. But what will happen when he receives form 5498? 

[Kan_EA]

Hello,

The minimum income requirement for your dependent son to file a federal tax return for 2022 is if you have an  earned income of at least $12,950, or unearned income (like interest or dividend) of at least $1,150.  As long as your son had earned income, he can contribute to IRA, regardless of age. Form 5498 is just informational and you do not need to file it with your tax return, anyways. Please let me know if you have any additional questions and please give me a thumbs up if I answered your question.

[Katherine S 63]

Hello,

Wonderful question....I am so glad to hear that you are claiming your college aged child.  This is the best way to get your full American Opportunity credit.

As far as income for your dependent.  If a dependent or any taxpayer for that matter, makes less than the standard deduction,

Single	$13,850.
Married, filing separately	$13,850.
Married, filing jointly; qualified widow/er	$27,700.
Head of household	$20,800.

then it is best to claim EXEMPT on the W4 that they fill out for any employer.

If a taxpayer works as a sole propertier and will get a 1099 NEC at the end of the year, they will need to file if their income is $400 or more.

A minor who may be claimed as a dependent has to file a return once their income exceeds their standard deduction. For tax year 2022 this is the greater of $1,150 or the amount of earned income plus $400 up to the full standard deduction of $12,950.

This this a great article on this topic:  https://turbotax.intuit.com/tax-tips/family/at-what-income-does-a-minor-have-to-file-an-income-tax-r...

I suggest you click on this link or copy and paste it into a browser.

As far as the IRA contribution goes, there is not form that needs to be entered for the contribution. The IRS will treat your contributions as though they were deductible if you do nothing.  He will be taxed on this income when he takes it out.  

Please reply if you have futher questions.

Katie S