How, or if, to enter 21-year child's income who is a dependent, full time college student and had a w-2 job

[snickyjoe]

My daughter is a 21-year old full time student who also works and had a gross income of $2,578.  I was told by my insurance agent that I must enter her income on my return, and that she can not, as I am unemployed and getting a monthly tax credit toward the health insurance I have for she and I.  I am also claiming her as a dependent this year.  The language in TurboTax is very confusing to me and seems to contradict itself regarding the rules in this regard.  I provided approximately 90% of her support and college expenses, and all of her health insurance and medical care by the way.  Below is the language I find confusing and my reason for needing clarification:

Child's Income

What is Child's Income?

If your child is younger than age 19 or a full-time student age 19-23, he or she must file a tax return for 2021 if he or she had any of the following:
- Unearned income (interest, dividends, capital gains, taxable scholarships, unemployment compensation) of more than $1,100. (She did not)
- Earned income (wages, salaries, tips, and fees) of more than $12,550. (She did not)
- Gross income (earned and unearned income) was more than the larger of:
$1,100 or earned income (up to $12,550) plus $350 (Seems to contradict sentence above)

If your child is younger than 19 or a full-time student age 19-23 and is required to file a return, you may be able to report the child's income on your return using Form 8814, Parent's Election to Report Child's Interest and Dividends. If you do, the child is not required to file a return.

If you decide not to report your child's income on your return, or you don't qualify to use Form 8814, the child must file a return, and may have to file Form 8615, Tax for Certain Children who have Unearned Income of More Than $2,200.

Note: If your child had earned income (wages, salaries, and tips) you are not allowed to enter that income on the parent's return.  (Seems to contradict much of the above.  If true, I have my answer -do not report her income on my return, but she will report on hers.  All other language is unnecessary!  However, if this is the case, I will be penalized for the amount of my tax credit that is for her, according to my insurance agent)  I would appreciate your assistance.

Thank you!

What Paperwork Do I Need?

- Form 8814
- Form 8615

[DoninGA · Accepted solution]

If all of her income was from wages as an employee and received a W-2, then she does not have to file a tax return.  Nor do you enter her earned income on your tax return.

If she had taxes withheld from her wages then she can file a tax return to get a refund for the taxes withheld.  If she does file a return make sure she indicates on her tax return that she can be claimed as a dependent.

Since she is a full time student under the age of 24 you should be able to claim her as a dependent under the Qualifying Child rules provided she meets all the requirements under the rules.

To be a Qualifying Child -

1. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.
2. The child must be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student or (c) any age and permanently and totally disabled.
3. The child must have lived with you for more than half of the year. Temporary absences while away at college are considered living with you.
4. The child must not have provided more than half of his or her own support for the year.
5. If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child.
6. The child must be a U.S. citizen or U.S., Canada or Mexico resident for some portion of the year.
7. The child must be younger than you unless disabled.

[mirassou]

This link makes it a little clearer...she doesn't have to file unless she's due a refund.

https://turbotax.intuit.com/tax-tips/family/tax-filing-requirements-for-children/L8ice6z0K

[snickyjoe]

Thank you for your prompt answer, and for clearing up the 'government speak' for me!

Have a great day!