Why Doesn't TurboTax Recognize the Income Threshold for Filing?

[rss1748]

My daughter's gross income is below the threshold for having to file federal taxes.  She has no special circumstances that would automatically require her to file.  Even the calculator on the IRS website says she doesn't need to file.  So why does TurboTax want her to file and pay a small amount of tax?  Is this simply so TT can get their e-file money?  I would have hoped that TT would advise that she doesn't need to file a federal return and to subsequently mail in her state return if necessary.

[MayaD]

How much was your daughter's income in 2021?

Dependent children who earn more than $12,550 of income in 2021 must file a personal income tax return and might owe tax to the IRS. Earned income only applies to wages and salaries your child receives as a result of providing services to an employer, even if only through a part-time job.

The rules change when your child receives income from sources other than employment, such as interest and dividend payments. When the 2021 total of this type of income exceeds $1,100, then a return must be filed for your child.

Tax Filing Requirements for Children

[rss1748]

She had $1500 in gross income - none as interest, dividends, or capital gains.  As I mentioned, the IRS's interactive assistant confirms that she does not need to file.  It appears that her state return wants the first two pages of the federal return attached, so that may be why TT wants her to file the federal return.

The ironic part is she doesn't owe any state tax, but the state (DE: non-resident) wants her to file anyway.  So, in order to file the state return, she apparently now needs to pay some federal tax. I've emailed the state to see if she is indeed required to file.

[VolvoGirl]

What kind of income?  A W2 or 1099NEC?  Is she a dependent?

A dependent doesn't have to file if they only have Social Security or W2 income under 12,550 but can file to get back any withholding taken out in boxes 2 or 17.  But you don't get boxes 4 or 6 back.   If they got a 1099NEC for it they do have to file a tax return for it.

[rss1748]

It was a stipend for an internship, reportable as other taxable income according to the university.  No W2, no withholding, no 1099 of any kind.  And yes, she is a dependent.

[fanfare]

Nothing prohibits you from filing if you want to, even if not required.

In some cases, it can be to your advantage.

TurboTax, which makes money from people filing, is not going to discourage that.

[DanP0428]

IRS Free File | Internal Revenue Service

Fill out the information and find a way for her to file for free.

[rss1748]

I know nothing prohibits you from filing even if you're not required to, and as I acknowledged I'm aware TT makes money from people filing.  In my daughter's case she is not required to file, nor is it to her advantage to file.  I would have hoped that TT, which guarantees maximum tax savings, would have at least told her that.