| Pub. 929, Tax Rules for Children and Dependents |
2005 Tax Year |
Publication 929 - Main Contents
Part 1. Rules for All Dependents
Terms you may need to know (see Glossary):
| Dependent |
| Earned income |
| Exemption |
| Gross income |
| Itemized deductions |
| Standard deduction |
| Unearned income |
This part of the publication discusses the filing requirements for dependents, who is responsible for a child's return, how
to figure a dependent's
standard deduction and exemption (if any), and whether a dependent can claim exemption from federal income tax withholding.
Whether a dependent has to file a return generally depends on the amount of the dependent's earned and unearned income and
whether the dependent is
married, is age 65 or older, or is blind.
A dependent may have to file a return even if his or her income is below the amount that would normally require a return.
See Other Filing
Requirements, later.
The following sections apply to dependents with:
To find out whether a dependent must file, read the section that applies, or use Table 1 on the previous page.
A dependent must file a return if all his or her income is earned income, and the total is more than the amount listed in
the following table.
Example.
William is 16. His mother claims an exemption for him on her income tax return. He worked part time on weekends during the
school year and full
time during the summer. He earned $5,600 in wages. He did not have any unearned income.
He must file a tax return because he has earned income only and his total income is more than $5,000. If he were blind, he
would not have to file a
return because his total income is not more than $6,250.
A dependent must file a return if all his or her income is unearned income, and the total is more than the amount listed in
the following table.
Example.
Sarah is 18 and single. Her parents can claim an exemption for her on their income tax return. She received $850 of taxable
interest and dividend
income. She did not work during the year.
She must file a tax return because she has unearned income only and her total income is more than $800. If she were blind,
she would not have to
file a return because she has unearned income only and her total income is not more than $2,050.
Election to report child's unearned income on parent's return.
A parent of a child under age 14 may be able to elect to include the child's interest and dividend income on the parent's
return. See Parent's
Election To Report Child's Interest and Dividends in Part 2. If the parent makes this election, the child does not have to file a
return.
Earned and Unearned Income
A dependent who has both earned and unearned income generally must file a return if the total income is more than line 5 of
the following
worksheet.
Table 1. 2005 Filing Requirements for Dependents
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If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a
return.
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See the definitions of “dependent,”“earned income,” and “unearned income” in the
Glossary.
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| Single dependents—Were you either age 65 or older or blind?
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No. You must file a return if any of the following apply.
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Your unearned income was over $800.
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Your earned income was over $5,000.
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Your gross income was more than the larger of:
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Yes. You must file a return if any of the following apply.
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Your unearned income was over $2,050 ($3,300 if 65 or over and blind),
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Your earned income was over $6,250 ($7,500 if 65 or older and blind),
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Your gross income was more than—
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The larger of: |
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This amount: |
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PLUS
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$1,250 ($2,500 if 65
or older and blind)
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| Married dependents—Were you either age 65 or older or blind?
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No. You must file a return if any of the following apply.
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Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.
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Your unearned income was over $800.
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Your earned income was over $5,000.
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Your gross income was more than the larger of:
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Yes. You must file a return if any of the following apply.
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Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.
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Your unearned income was over $1,800 ($2,800 if 65 or over and blind),
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Your earned income was over $6,000 ($7,000 if 65 or older and blind),
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Your gross income was more than—
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The larger of: |
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This amount: |
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PLUS
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$1,000 ($2,000 if 65
or older and blind)
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Example 1.
Joe is 20, single, not blind, and a full-time college student. His parents provide most of his support and claim an exemption
for him on their
income tax return. He received $200 taxable interest income and earned $2,750 from a part-time job.
He does not have to file a tax return because his total income of $2,950 ($200 interest plus $2,750 in wages) is not more
than $3,000, the amount
on line 5 of his filled-in Filing Requirement Worksheet for Most Dependents (shown next).
Example 2.
The facts are the same as in Example 1 except that Joe had $600 taxable interest income.
He must file a tax return because his total income of $3,350 ($600 interest plus $2,750 wages) is more than $3,000, the amount
on line 5 of his
filled-in worksheet (shown next).
Age 65 or older or blind. A dependent who is age 65 or older or blind must file a return if his
or her gross (total) income is more than line 7 of the following worksheet.
Example 3.
The facts are the same as in Example 2 except that Joe is also blind. He does not have to file a return because his total income of
$3,350 is not more than $4,250, the amount on line 7 of his filled-in Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or
Blind (shown next).
Filing Requirement Worksheet
for Dependents
Who Are Age 65 or Older or Blind |
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1.
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Enter dependent's earned
income plus $250
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$3,000
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2.
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Minimum amount
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800
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3.
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Compare lines 1 and 2. Enter
the larger amount
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3,000
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4.
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Maximum amount
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5,000
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5.
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Compare lines 3 and 4. Enter
the smaller amount
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3,000
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6.
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Enter the amount from the following table that applies to the dependent
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1,250
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Marital Status |
Amount |
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Single
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Either 65 or older or blind
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$1,250
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65 or older and blind
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$2,500
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Married
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Either 65 or older or blind
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$1,000
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65 or older and blind
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$2,000
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7.
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Add lines 5 and 6. Enter the total
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4,250
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8.
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Enter the dependent's gross (total) income. If line 8 is more than line 7, the dependent
must file an income tax return. If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent
must file an income tax return if line 8 is $5 or more.
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$3,350
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Other Filing Requirements
Some dependents may have to file a tax return even if their income is below the amount that would normally require them to
file a return.
A dependent must file a tax return if he or she owes any other taxes, such as:
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Social security and Medicare taxes on tips not reported to his or her employer,
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Uncollected social security and Medicare or railroad retirement taxes on tips reported to his or her employer or on group-term
life
insurance,
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Alternative minimum tax,
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Recapture taxes, such as the tax from recapture of an education credit, or
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Tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. But if the dependent
is filing
a return only because of this tax, the dependent can file Form 5329 by itself.
A dependent must also file a tax return if he or she:
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Received any advance earned income credit payments from his or her employers in 2005,
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Had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social
security and
Medicare taxes, or
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Had net earnings from self-employment of at least $400.
Spouse itemizes.
A dependent must file a return if the dependent's spouse itemizes deductions on a separate return and the dependent
has $5 or more of gross income
(earned and/or unearned).
Should a Return Be Filed Even If Not Required?
Even if a dependent does not meet any of the filing requirements discussed earlier, he or she should file a tax return if
either of the following
applies.
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Income tax was withheld from his or her income.
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He or she qualifies for the earned income credit, the additional child tax credit, or the health coverage tax credit. See
the tax return
instructions to find out who qualifies for these credits.
By filing a return, the dependent can get a refund.
Responsibility for Child's Return
Generally, the child is responsible for filing his or her own tax return and for paying any tax, penalties, or interest on
that return. If a child
cannot file his or her own return for any reason, such as age, the child's parent or guardian is responsible for filing a
return on his or her behalf.
Signing the child's return.
If the child cannot sign his or her return, a parent or guardian can sign the child's name in the space provided at
the bottom of the tax return.
Then, he or she should add: “ By (signature), parent (or guardian) for minor child.”
Authority of parent or guardian.
A parent or guardian who signs a return on a child's behalf can deal with the IRS on all matters connected with the
return.
In general, a parent or guardian who does not sign the child's return can only provide information concerning the
child's return and pay the
child's tax. That parent or guardian is not entitled to receive information from the IRS or legally bind the child to a tax
liability arising from the
return.
Third party designee.
A child's parent or guardian who does not sign the child's return may be authorized, as a third party designee, to
discuss the processing of the
return with the IRS as well as provide information concerning the return. The child or the person signing the return on the
child's behalf must check
the “ Yes” box in the “ Third Party Designee” area of the return and name the parent or guardian as the designee.
If designated, a parent or guardian can respond to certain IRS notices and receive information about the processing
of the return and the status of
a refund or payment. This designation does not authorize the parent or guardian to receive any refund check, bind the child
to any tax liability, or
otherwise represent the child before the IRS. See the return instructions for more information.
Designated as representative.
A parent or guardian who does not sign the child's return may be designated as the child's representative by the child
or the person signing the
return on the child's behalf. Form 2848, Power of Attorney and Declaration of Representative, is used to designate a child's
representative. See
Publication 947, Practice Before the IRS and Power of Attorney, for more information.
If designated, a parent or guardian can receive information about the child's return but cannot legally bind the child
to a tax liability unless
authorized to do so by the law of the state in which the child lives.
IRS notice.
If you or the child receives a notice from the IRS concerning the child's return or tax liability, you should immediately
inform the IRS that the
notice concerns a child. The notice will show who to contact. The IRS will try to resolve the matter with the parent(s) or
guardian(s) of the child
consistent with their authority.
Child's earnings.
For federal income tax purposes, the income a child receives for his or her personal services (labor) is the child's,
even if, under state law, the
parent is entitled to and receives that income.
If the child does not pay the tax due on this income, the parent may be liable for the tax.
Child's expenses.
Deductions for payments that are made out of a child's earnings are the child's, even if the payments are made by
the parent.
Example.
You made payments on your child's behalf that are deductible as a business expense and a
charitable contribution. You made the payments out of your child's earnings. These items can be deducted only on the child's
return.
The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited
to the larger of:
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$800, or
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The individual's earned income plus $250, but not more than the regular standard deduction (generally $5,000).
However, the standard deduction for a dependent who is age 65 or older or blind is higher.
Certain dependents cannot claim any standard deduction. See Standard Deduction of Zero, later.
Table 2.
Use Table 2 to figure the dependent's standard deduction.
Table 2. Standard Deduction Worksheet for Dependents
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Use this worksheet only if someone can claim you (or your spouse, if filing jointly) as a dependent.
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If you were 65 or older and/or blind, check the correct number of boxes below. Put the total number of boxes
checked in box c and go to line 1.
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a.
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You
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65 or older
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Blind
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b.
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Your spouse, if claiming
spouse's exemption
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65 or older
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Blind
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c.
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Total boxes checked
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1.
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Enter your earned income (defined below) plus $250. If none, go on to line 3.
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1.
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2.
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Minimum amount.
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2.
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$800
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3.
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Compare lines 1 and 2. Enter the larger of the two amounts here.
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3.
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4.
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Enter on line 4 the amount shown below for your filing status.
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Single or Married filing separately—$5,000
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Married filing jointly or qualifying widow(er) with
dependent child—$10,000
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Head of household—$7,300
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4.
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5.
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Standard deduction. |
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a.
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Compare lines 3 and 4. Enter the smaller amount here. If under 65 and not blind, stop here.
This is your standard deduction. Otherwise | |
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