IRS Publication 929: Tax Rules for Children And Dependents Definition

What Is IRS Publication 929: Tax Rules for Children And Dependents?

IRS Publication 929: Tax Rules for Children and Dependents is a document published by the Internal Revenue Service (IRS). It describes filing requirements for children and other dependents who have income of their own to report.

Key Takeaways

  • IRS Publication 929: Tax Rules for Children and Dependents is published by the IRS to help individual taxpayers with tax laws as it affects children and dependents.
  • The publication includes how investment income should be reported for children, regardless of whether those children are claimed as dependents.
  • While children are the most commonly recognized type of dependent, other individuals in your household can be claimed as a dependent on your tax return.
  • Due to the tax law passed in December 2017, the Child Tax Credit doubled to $2,000 per qualifying child with $1,400 of that amount refundable in 2022 and $1,600 of that refundable in 2023.
  • Other special topics include children with earned or unearned income, withholding from wages, or whether or not a child should file their own return.

Understanding IRS Publication 929: Tax Rules for Children And Dependents

IRS Publication 929: Tax Rules for Children and Dependents is published by the IRS to help individual taxpayers through their tax return, specifically concerning tax law as it affects children and dependents.

IRS Publication 929 provides guidance on how people claimed as dependents should compile and file tax information. It outlines in detail the filing requirements for individuals considered dependents and includes how to calculate the dependent's standard deduction and any applicable exemptions.

The publication also includes information on how investment income should be reported for children, regardless of whether those children are claimed as dependents.

While children are the most commonly recognized type of dependent, you may be able to claim other individuals in your household as a dependent on your tax return. Older adults and disabled persons also fall into that category, but the IRS requires dependents pass various tests to determine eligibility. the individual offers two tests that can help you determine if you as a taxpayer can claim another individual on your tax return.

The tests include the relationship test, the member of household test, the gross income test, and the support test. Dependents do not have to be blood relatives of the taxpayer in order to be a dependent. The individual does not have to be a biological relative or a member of the taxpayer's nuclear family. Though dependents must have gross income less than $4,300 and the taxpayer claiming a dependent generally needs to provide more than half of the person's total support during the year.

Publication 929 contains worksheets that a taxpayer can use to help determine qualifications or dollar amounts.

Publication 929 - Part One (Rules for All Dependents)

The first part of the publication discusses the filing requirements for a dependent. In general, the determining factors on whether or not a dependent has to file a tax return is based on the amount of the dependent's earned and unearned income, whether they are married, whether they are blind, and their age.

In addition to earned income and unearned income thresholds, here are other filing requirements to be met. A dependent must file a return if they owe Social security, Medicare, alternative minimum tax, recapture taxes, tax on a health savings account, or additional tax on a qualified plan. In addition, Publication 929 states that a dependent must file their own taxes if they have a certain amount of earnings from a church or qualified church-controlled organization or had net earnings from self-employment of at least $400.

A dependent must file their own return if they are married, their spouse itemizes their return, and the dependent has $5 or more than gross income.

Publication 929 - Part 2 (Tax on Unearned Income of Certain Children

Publication 929 is also used to define what taxes are due on unearned income for certain dependents. There are two primary rules regarding this topic:

  1. If the child earns interest and dividend income less than $11,000, the child's parent may report the income on their own return as opposed to on the child's return.
  2. If the child earns interest and dividends of more than $2,200, the child is subject to special tax rates.

Should parents pursue option 1 above, they must file Form 8814 (Parents' Election To Report Child's Interest and Dividends). There are various requirements to making this election including the age of the child, characteristics of the child's potential return, and taxes withheld.

The Benefit of Having Children and Dependents

There are big tax benefits available to a taxpayer able to claim dependents. The most popular and best-known of these benefits is the Child Tax Credit. The credit lowers the taxpayer’s liability and offers additional tax relief for taxpayers with children.

With the passing of the tax law in December 2017, the Child Tax Credit doubled to $2,000 per qualifying child. In 2022, the refundable portion of this tax credit is $1,500, and the refundable portion of the credit is increasing to $1,600 in 2023. Now that the credit is refundable, a taxpayer who claims the Child Tax Credit who owes no taxes, or less than $1,500 in 2022, can receive that amount as a refund.

In addition to the Child Tax Credit, there is the Additional Child Tax Credit, a refundable tax credit available to families with three or more qualifying dependents. Other dependents—including children ages 17–18 and full-time college students ages 19–24—may also qualify taxpayers to receive a nonrefundable credit of up to $500 each.

Does a Parent Have to Claim Their Dependent's Income?

No, parents are not required to claim their dependent's income. In addition, the dependent may not be required to file a return of their own if their income in less than the standard deduction amount and they are not required to file due to other taxes due. In 2022, the standard deduction for a single filer is $12,950, increasing to $13,850 in 2023.

At What Age Can You No Longer Claim a Child as a Dependent?

A qualifying child must meet an age test and be younger than 19 years old to be claimed as a dependent. If the child is a student meeting certain qualifications, they may be younger 24 years old and still be claimed as a dependent. Alternatively, there is no age restriction for children permanently and totally disabled.

Can a Parent Claim a Child That Does Not Live With Them?

Generally, no, but there are exceptions for the children of divorced or separated parents that meet other qualifying criteria, children born or adopted during the year, and children absent temporarily for reasons like education or illness.

The Bottom Line

Publication 929 outlines many filing requirements and tax information relating to dependents. The publication informs taxpayers on who can be claimed as a dependent on another person's tax return. In addition, Publication 929 is useful to determine how to report income, the amount of income a child needs to report, and options for reporting that option on a parent's tax return instead.

Article Sources
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  1. Internal Revenue Service. "About Publication 929, Tax Rules for Children and Dependents."

  2. Congressional Research Service. "The Child Tax Credit: How It Works and Who Receives It," Page 1.

  3. Internal Revenue Service. "Rev. Proc. 2022-38," Pages 13-14.

  4. Internal Revenue Service. "Publication 929, Tax Rules for Children and Dependents."

  5. Internal Revenue Service. "Publication 501, Dependents, Standard Deduction, and Filing Information."

  6. Internal Revenue Service. "Child and Dependent Care Credit FAQs."

  7. Internal Revenue Service. "Rev. Proc. 2022-38," Page 9.

  8. Internal Revenue Service. "Rev. Proc. 2021-45," Page 9.

  9. Internal Revenue Service. "Instructions for Schedule 8812."

  10. Internal Revenue Service. "An Overview of the Credit for Other Dependents."

  11. Internal Revenue Service. "IRS provides tax inflation adjustments for tax year 2023."

  12. Internal Revenue Service. "Publication 501, Dependents, Standard Deduction, and Filing Information - Dependents."

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