Does my dependent need to pay tax liability?

[AaronsAunt]

My daughter is a 22 year old college student and a dependent. Her W2 shows roughly $4,300 in wages, etc. Using your software we calculated that she has a modest federal tax liability. (We haven't looked at the state yet.)

As a dependent, does she really need to pay this liability or do we have the option to just not file? Same question regarding state (Oregon).

Thank you. 

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@AaronsAunt 

[rjs]

Either you entered something incorrectly in TurboTax, or there's something you're not telling us. If your daughter's only income for the year is a W-2 with about $4,300 in wages, she has no tax liability and is not required to file. Does she have some other income that you haven't mentioned?

If you have further questions, please give exact amounts, not rough figures. Sometimes one dollar makes a difference.

[AaronsAunt]

@rjs, you got me! There was an important error in my question. She has no federal liability but she does have an $88 liability to her state of residence (Oregon). I see this is because her W2 shows nothing withheld by the state.

My ultimate question is still, as a dependent does she actually need to file at all (meaning, can we save the $88) or is she required to file?

[rjs]

The Oregon rules for whether a dependent is required to file are essentially the same as the federal rules. As far as I can see from the instructions for Oregon Form OR-40, if her only income for the year is $4,300 of wages on a W-2, she should not owe any Oregon tax, and would not have to file an Oregon tax return. So I don't understand how she can owe any tax to Oregon. If she does owe $88, she certainly has to file. But you have to figure out where that $88 is coming from. It's hard to do that here in the Community, because we can't see the tax return.

By the way, you are using the term "tax liability" differently from the way the IRS and tax professionals usually use it. Tax liability is not the amount you owe on your tax return. It's the total amount of tax that you have to pay for the year, whether it's paid by withholding or by a payment when you file your return, or a combination of the two. The amount you owe on your tax return is a payment due or a balance due. You have a tax liability even if you are getting a refund. Tax liability does not depend on how much tax was withheld from your pay.

[AaronsAunt · Accepted solution]

Ok, so I  discovered the answer to my question: Yes, she needs to file and pay this liability. According to the instructions for Oregon's Form OR-40, a dependent must file if the earned income is "[t]he larger of $1,150, or your earned income plus $400, up to the standard deduction amount for your filing status." (The standard deduction is $2,420.)

Thanks for your help, TurboTax Community!