Do I include dependent income on my return?

In general, if you have dependents who are earning taxable income (such as a teenager who is working a part-time job), then you do not include their income on your return. Instead, they should file their own tax return and check the box that says "Someone can claim you as a dependent." However, there are some circumstances where you can claim income on behalf of one of your dependents.

Exceptions

If any of the following apply, then you may combine your dependent's income with yours on your tax return.

Unearned Income

When the sum of a dependent’s unearned income is less than $1,150, a parent may claim it on their tax return using IRS Form 8814. Unearned income is money that wasn’t earned through employment such as interest from a bank account or dividends from investments.

Gross Income

If the dependent's gross income was less than $12,950 (the 2022 standard deduction of a single taxpayer), then you have the option to file a separate return or combine it with yours.

No Federal Income Tax was Withheld

If no federal income tax was withheld from the dependent’s paychecks, then it may be combined with your tax return.

Caution: Combining Could Lead to More Taxes

Note that even though it may seem easier to combine your dependent’s income with yours, you may inadvertently pay more in taxes than you ultimately have to. 

For example, suppose your child worked over the summer and earned $3,000. In this situation, their income was low enough that they didn’t have any federal income tax withheld. 

However, let’s assume that you’re in the 24% tax bracket. If you combine your dependent’s income with yours, you’ll now pay 24% on top of these earnings resulting in $720 of additional taxes. For this reason, it may be more advantageous for both of you to file separate returns.