What level do my kids need to file taxes?

[Craiger2]

I've helped my kids start teenager investment accounts.  They are starting to get 1099 div and B forms but still under a $1000.  What level of income or types of transactions will trigger them needing to file?  Can we just ignore any 1099's for them as long as their income generated is low enough?

[DawnC]

Yes, the limit of interest dividends and capital gains is $1,250.   Even if you're a dependent, you'll generally need to file your own 2023 tax return if:

• Your earned income (money you made by working) exceeds $13,850
• Your unearned income (interest, dividends, capital gains, etc.) exceeds $1,250
• Your business or self-employment net income (gross minus expenses) is at least $400
• Your gross income (earned plus unearned) exceeds the larger of $1,250 or your earned income (up to $13,450) plus $400

But even if your income falls below these filing requirements, you'll want to file your own tax return to get a refund of any federal or state taxes withheld from your paychecks.

[Craiger2]

We'll watch fo the $1250 threshold.  Once that is exceed, say a child or even college age earns over $2000 at some point for interest and dividends, they would file taxes because above 1250, but would I still as the parent be able to declare them as a dependent at that point?  When must you stop claiming someone as a dependent?

[AmyC]

Yes, you will still claim them as dependents. A qualifying child - under age 24 in college or that is disabled can be claimed provided they meet the dependency test. See  Publication 501 - Internal Revenue Service page 11 for details.

The problem comes later when paying over half of their support may come into question. Vacations, food, etc all count. See  IRS Worksheet for Determining Support so you may well claim them through college.

Once they no longer qualify as a dependent, if they move home unemployed later, you may be able to claim them as Other Dependent.