Those Darn Kids
The risk of having kids file their own tax returns
If you have children younger than 19 years old (or 24 if a full-time student), you should coordinate the filing of their taxes with yours. HOW they file, though, is a matter of tax law.
Your child is away for college. You try to file your family tax return on April 14th after finally receiving all the required documentation. Unfortunately, your e-filed tax return is rejected because your college student filed their own tax return and received a nice refund. Now you have a mess on your hands. You must file an extension, file an amended tax return for your child, return a refund, and potentially paper file your tax return.
A matter of law
The dependency rules and kiddie tax laws are clear and must be followed. If you have a dependent child as determined by the tax code, you will need to conduct the tax calculations to determine what is taxed at your child’s tax rate and what will be taxed at your higher tax rate. The same is true for which tax return receives what level of standard deductions. This requires coordination of your tax filings with that of your dependent children.
Consider using the tax filing process to introduce your young adult to the benefits of tax planning. You never know, it could save you money as well as the hassle of undoing an improperly filed tax return.
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Mia Verc, CPA; Janice Papais, CPA
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