Samantha Cowan, CPA
Sep 13, 2023
Many students have summer jobs and some work all throughout the year. While these jobs can offer beneficial work experience, they can also create a lot of questions about how taxes work.
Many students have summer jobs and some work all throughout the year. While these jobs can offer beneficial work experience, they can also create a lot of questions about how taxes work. Below are some common questions regarding filing a tax return for dependents that can help you and your student prepare for tax season.
Q: My high school student received a W-2. Do I report their income on my return?
A: No. The income is under your student’s social security number, not yours; therefore, they are responsible for reporting that income.
Q: Does this mean my student needs to file their own return?
A: It depends. If their earned income is more than $12,950 in that year, then yes, they are required to file a return. Earned income includes wages, tips, salary, and self-employed income (i.e. babysitting, dog walking, mowing/yardwork). If they have self-employment income, things become more complicated as they are now also subject to self-employment taxes.
If they made less than that amount in earned income, then they may not need to file. However, your dependent is required to file if they make over $1,150 of investment income.
Q: Taxes were withheld from my student’s paycheck and they are under the threshold. Will the government automatically issue a refund?
A: No. A tax return must be filed to claim and receive a refund.
Q: My student is under the filing threshold. Can they be exempt from federal tax withholding?
A: There is an exemption available if they did not owe taxes in 2022 and are not expected to owe taxes for 2023. If both statements are true, then when filling out a W-4 your student would need to write “Exempt” in the space below Step 4(c) of the W-4.
Q: If my student files their own return, can I still claim them as a dependent on my return?
A: When your dependent files their own tax return, it’s important that they indicate on their return that they are single and being claimed as a dependent on someone else’s return. However, to determine this you should consult your tax advisor regarding your specific situation.
Q: Do students/dependents get to use the standard deduction to offset their income?
A: Yes. The standard deduction for a dependent is either the greater of $1,150 or their earned income plus $400 (so long as that total doesn’t exceed the basic standard deduction, which is $12,950 for single filers in 2023). Essentially, if their earnings are under this threshold and any taxes were withheld, it’s safe to assume that amount can be refunded.
Samantha Cowan, CPA, is a Senior Tax Associate at Arledge, the largest locally owned accounting firm in the Oklahoma City metropolitan area. Arledge is a recognized leader in the accounting industry offering practical solutions in the areas of tax planning, auditing, consulting, accounting advisory services and client accounting.
This article contains general information only and does not constitute tax advice or any other professional services. Before making any decisions or taking any action that might affect your income taxes, you should consult a professional tax advisor. This article is not intended for and cannot be used to avoid future penalties that may be imposed by the Internal Revenue Service.