Many parents encourage their children to work so they can learn responsibility, independence, money management, and the value of earning an income.
But once a child starts earning money, parents often ask an important question:
Does my child need to file a tax return?
The answer depends on the child’s income type, income amount, filing status, and whether the child can be claimed as a dependent. The IRS does not exempt someone from filing simply because they are young or because a parent claims them as a dependent.
At True North Wealth Management, we help families understand how tax planning, education planning, earned income, savings, and long-term financial habits fit together.
Age Does Not Determine Filing Requirements
A child’s age does not automatically determine whether they need to file a federal tax return.
Instead, the IRS looks at factors such as:
Earned income
Unearned income
Gross income
Self-employment income
Filing status
Dependency status
Whether taxes were withheld
A child may need to file even if they are a minor. A college student may need to file even if parents still claim them as a dependent.
Earned Income vs. Unearned Income
Before deciding whether a child needs to file, it helps to understand the difference between earned and unearned income.
Earned income generally includes wages, salaries, tips, and self-employment income from work.
Unearned income generally includes interest, dividends, capital gains, taxable scholarships, and certain investment income.
These categories matter because the filing thresholds are different.
2025 Filing Requirements for Dependent Children
For the 2025 tax year, a dependent generally must file a federal tax return if their income exceeds certain thresholds.
According to IRS Publication 501, a single dependent under age 65 generally must file if unearned income was more than $1,350, earned income was more than $15,750, or gross income was more than the larger of $1,350 or earned income up to $15,300 plus $450.
These thresholds can change each year, so families should review current IRS guidance or consult a qualified tax professional before filing.
Example: Part-Time Job and Small Investment Income
Suppose Kyle is a 20-year-old college student claimed as a dependent by his parents. He earns $5,500 from a part-time campus job and receives $400 in interest income.
For 2025, Kyle’s earned income and unearned income are both below the filing thresholds. His gross income is also below the applicable threshold. Based on these facts alone, he may not be required to file a federal tax return.
However, he may still choose to file if federal income tax was withheld from his paycheck and he may be eligible for a refund.
Self-Employment Income Can Trigger Filing Earlier
A child with self-employment income may need to file even if their total income is relatively low.
This can apply to income from:
Babysitting
Lawn care
Tutoring
Freelance work
Social media income
Craft sales
DoorDash or delivery work
Online reselling
Snow shoveling
Pet sitting
Generally, if a child has net self-employment earnings of $400 or more, they may need to file a tax return and pay self-employment tax. This is a common surprise for teens and college students who receive Form 1099 income or earn money through gig work.
Filing May Be Worthwhile Even When It Is Not Required
Even if a child does not have to file, filing may still make sense.
A child may want to file if:
Federal income tax was withheld from wages
State income tax was withheld
They qualify for a refund
They need a tax record for financial aid or future planning
They made estimated tax payments
They had self-employment income
They want to begin learning how taxes work
Filing a return can also be a useful teaching opportunity. It helps young workers understand paychecks, withholding, savings, taxes, and recordkeeping.
Watch for the Kiddie Tax
Children with investment income may be subject to special rules often called the kiddie tax.
For 2025, a child with more than $2,700 of unearned income may need to file Form 8615 if they meet certain requirements. Unearned income may include interest, dividends, capital gains, rents, royalties, and certain taxable scholarships.
Families with custodial investment accounts, inherited assets, taxable scholarships, or significant investment income for children should review these rules carefully with a tax professional.
Filing Does Not Automatically Stop a Parent From Claiming the Child
Some parents worry that if their child files a tax return, the parent can no longer claim the child as a dependent.
That is not necessarily true.
A child can file their own tax return and still be claimed as a dependent by a parent if the dependency requirements are met. The child’s tax return should indicate that someone else can claim them as a dependent.
This detail matters because it may affect tax credits, education benefits, and the standard deduction.
State Tax Rules May Be Different
Federal filing rules are only part of the picture.
State income tax rules can vary. A child may not need to file a federal return but may still have a state filing requirement, depending on where they live, work, or attend school.
For Alaska residents, there is no state individual income tax. However, a student who works in another state or attends college out of state may need to review that state’s rules.
Help Your Child Build Good Financial Habits
A child’s first job can be a great time to teach financial basics.
Parents can help children understand:
How paychecks work
What taxes are withheld
Why saving matters
How to track income
How to keep basic tax records
What a W-2 or 1099 means
How Roth IRA contributions may work if the child has earned income
Why refunds are not “free money”
How to budget spending, saving, and giving
Early work experience can become the foundation for long-term financial confidence.
When to Ask for Help
Consider speaking with a tax professional if your child has:
Self-employment or gig income
Investment income
A custodial account
A taxable scholarship
Multiple jobs
Out-of-state income
1099 income
Capital gains
Income from online platforms
A possible kiddie tax issue
Questions about Roth IRA contributions
Tax rules for dependents can be more complicated than they first appear.
Make Tax Filing Part of Financial Education
A child’s first tax return is more than paperwork. It is an opportunity to teach responsibility, planning, and good financial habits.
At True North Wealth Management, we help families connect tax awareness with the broader financial picture, including education planning, savings strategies, retirement planning, investment management, and family financial goals.
If you have questions about how your child’s income fits into your family’s financial plan, schedule a conversation with True North Wealth Management.
A thoughtful review can help you understand the rules, avoid surprises, and help your child build strong financial habits early.
Important Disclosures:
This material is for informational purposes only and is not intended as tax, legal, accounting, education, or individualized financial advice. Filing requirements, income thresholds, standard deductions, kiddie tax rules, and state tax rules may change. Please consult qualified tax and legal professionals regarding your individual situation.
Investopedia.com, April 15, 2024
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite and customized by True North Wealth Management LLC to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.