2021 Tax Year - does a dependent minor receiving SSA-1099 as their only income need to file a tax return

[joepalm4]

If a dependent minor (i.e., a child) receives SSA disability income through a disabled parent, resulting in their own SSA-1099, does the child need to file a tax return? I understand the parents don't include the child's SSA income on theirs - the question is whether or not to file a tax return for the child. I'm a bit of confused from previous discussions:

These claim that if the child's only income is SSA benefits, they do not need to file a tax return:

Do I have to claim a SSA-1099 form on my child. If so how??? I don't see where they asked that quest... 

Where do i enter my child's ssa1099 on my tax return 

However, it gets a bit confusing in this discussion:

Does my minor child have to file a form for ssa-1099 income. 

The initial response from @jerry2000 states that if SSA is the only income a child has, then the child does not have to file or report it. However, in a follow up response, @jerry2000 refers to the Publication 501, and @macuser_22 references the following from this Publication (I updated to reflect 2021 numbers):

You must file a return if any of the following apply:

1. Your unearned income was more than $1,100.
2. Your earned income was more than $12,550.
3. Your gross income was more than the larger of—
  a. $1,100, or
  b. Your earned income (up to $12,200) plus $350.

Assuming SSA falls in unearned income, this sounds like filing for the child would not only necessary, but common. I'm confused why there is so much ambiguity on the topic.

I'd love to hear from tax experts, including the ones who have weighed in on this topic:

@DaveF1006, @VolvoGirl, @DoninGA, @jerry2000, @macuser_22 

Thank you!

[VolvoGirl · Accepted solution]

You start with the first situation,   If the SSA-1099 is the only income.   Then it is not taxable and you don't need to file.  Then  you can stop.   It does not fall under the other categories and there is no other income.  It is not unearned income.   Unearned income would be mainly interest, dividends and investments.   

See the top of the table in pub 501 Filing Requirements for Dependents -  It says unearned income includes......taxable Social Security benefits.......  BUT  since you only get Social Security it is not taxable to begin with.   

Social Security is only taxable when you have other income THEN.......

Up to 85% of Social Security becomes taxable when all your other income plus 1/2 your social security, reaches:

Married Filing Jointly: $32,000

Single or head of household: $25,000

Married Filing Separately: 0

[macuser_22]

SS income becomes taxable when half the SS income plus all other taxable income exceeds $25,000 for a single person.      Since no child receives more then $50,000 of SS it could never be taxable if that is the only income.

See IRS Pub 915 page 3,

https://www.irs.gov/pub/irs-pdf/p915.pdf

[joepalm4]

Thank you, @VolvoGirl. Your answer is very clear and helpful!

[joepalm4]

Thank you, @macuser_22!

[srowlett13]

So what happens if they do get other income. Is Soc Sec survivor benefits earned or unearned income? If half their SS survivor benefit + all their other income is less than $12,000 is it still taxable and do they still need to file a return?

[DMarkM1]

It depends.  It's a two step process.  First you have to determine if any of his social security it taxable.  Add 1/2 of his social security benefits to all other income.  If the total is between 25,000 and 34,000 then 50% of his social security may be taxable. If the total is more than $34,000 then up to 85% may be taxable.  If any is taxable it will be unearned income.  

Once you generally know the percent of social security that is taxable multiply that by the social security benefit amount to get the taxable amount of social security.  

Now you can use the Table 2 from Publication 501 (here) to determine if he must file a return.  He must file if any of the following is true: 

1. His unearned income was more than $1,150 (include his taxable social security for this test)
2. His earned income was more than $12,950.
3. His gross income (taxable social security plus all other income) was more than the larger of:

• $1,150, or
• Your earned income (up to $12,550) plus $400.