Am I supposed to file my teenager taxes?

[TXOriginal]

My teenager made roughly $1400 in wages (received W-2) from life guarding, and also received $7400 in unemployment (received 1099-G) due to the pandemic.  I'm trying to first figure out if he needs to file?  Turbo tax shows if they made less than $12400 in earned income they don't need to file, however it does say if they made more than $1200 in unearned income they do file.  I'm not sure what category unemployment falls into?   Also I'm trying to make heads or tails if I do need to file, should it be under my return or his own?  Note I do claim as a dependent.

[MarilynG1 · Accepted solution]

Yes, your teen should file their own return.  They can indicate that they 'are claimed as a dependent' on your return in the My Info section in TurboTax. 

Unemployment is considered taxable income (although it is unearned income).  They may be eligible for a refund.

Click this link for info on How to Enter a 1099-G for Unemployment or Paid Family Leave.

This article gives detailed info on Unemployment Income. 

[Curious One]

As a follow up to this question, my teenager also worked as a lifeguard.  In 2019, she earned less than $400.  I didn't file a return for her for 2019.  Was it required?  If so, what are the consequences for failing to file?  Can this omission be rectified?  

In 2020, she earned slightly less than $4000.  Based on the prior response, she clearly has to file for 2020, but can take the standard deduction to recover any income taxes paid.  Regardless of any filing she makes for 2020, I gather than I can still claim her as a dependent so long as all conditions to doing so are satisfied.  Is that right?  

If a dependent teenager (or arguably anyone else) knows that her income (total income, AGI, other?) will be less than the standard deduction, and therefore that no income tax will be due, can she complete the W-4 to avoid withholding?  If so, how is it done?  Historically we have simply written EXEMPT at the bottom of the form.  

[Hal_Al]

Q.  I didn't file a return for her for 2019.  Was it required? 

A. No.  See filing rules below.

Q. In 2020, she earned slightly less than $4000.  Does she have  to file for 2020?

A. No.  See filing rules below. But, she is allowed to file if she needs to get back income tax withholding. She cannot get back social security or Medicare tax withholding.

Q. Regardless of any filing she makes for 2020, I gather than I can still claim her as a dependent so long as all conditions to doing so are satisfied.  Is that right?  

A. Yes.  In TurboTax, she indicates that somebody else can claim her as a dependent, at the personal information section.

Q. If a dependent teenager (or arguably anyone else) knows that her income (total income, AGI, other?) will be less than the standard deduction, and therefore that no income tax will be due, can she complete the W-4 to avoid withholding?  If so, how is it done? 

A. Yes. Continue to choose exempt on the W-4.  The rule is: your are exempt  if you had no tax liability in 2020 and expect to have none in 2021. 

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 2020 if he had any of the following:

1.          Total income (wages, salaries, taxable scholarship etc.) of more than $12,400 (2020).
2.          Unearned income (interest, dividends, capital gains, unemployment) of more than $1100.
3.          Unearned income over $350 and gross income of more than $1100
4.          Household employee income (e.g. baby sitting, lawn mowing) over $2100 ($12,400 if under age 18)
5.          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.

[Curious One]

Very helpful.  Thank you.  

One further wrinkle.  How does contributing to an IRA impact on the need to file a teenager's return, assuming there was no income tax withholding for which refund is sought and AGI (assume that's the right income metric) is below 12,400?

[Hal_Al]

Q.  How does contributing to an IRA impact on the need to file a teenager's return?

A. Simple answer: he still  does not need to file a tax return. 

Since the child does not need an IRA deduction (his taxable income is already 0), you most likely want to invest in a Roth IRA.  A contribution to a Roth IRA does not need to be reported on a tax return.   A Traditional non-deductible IRA  contribution does need to be filed, but can be file on a stand alone form 8606 (does not have to be part of a whole tax return). 

A dependent is not eligible for the Retirement Savings Contribution Credit.  So, he does not need to file for that. 

[javemm]

Very useful information. I just need a little help with the following... my teen child didn't earn enough to file taxes for 2021 but he got taxes withheld so I'd like for him to learn how to file taxes and prepare for the future... the question is: if I want to teach him to file his own taxes, do I need to create a whole new account in TurboTax for him (even though he's still a minor) ? or is there a way to use my own account and add a separate filing (for him)? Many thanks for the help!

[AmyC]

Your teenager will need their own account. Your teen can file free, see Free Tax Filing With TurboTax® - New Full Service Free Offer.