Each tax season brings about a lot of anticipation for people who are used to receiving a nice tax refund from the government each year. For those who aren't familiar with the tax preparation process, though, tax season can raise a whole bunch of questions. One of those questions is likely to be asked by young filers who live with their parents: Can you file a tax return if your parents claim you?
The answer is a definite yes.
A parent claiming a child as a dependent is much more consequential for that parent's own taxes than anything else. Take one straightforward example: a father who claims his 21-year-old daughter. That father could use the claim for a personal exemption, which is worth a deduction of about $4,000 off of a person's taxable income.
Parents claiming a tax benefit of having dependents doesn't preclude those dependents from filing tax returns and claiming certain benefits themselves, though. In fact, the Internal Revenue Service (IRS), sets certain benchmarks for scenarios in which a dependent is required to file a tax return.
For example, if a parent claims a child who is not blind and under the age of 65, but that child's earned income rose above $6,350 during a calendar year, then the child is still required to file a return. The IRS' official website illustrates one scenario in which the rule apply.
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 $7,000 in wages. He didn't have any unearned income.He must file a tax return because he has earned income only and his gross income is more than $6,350. If he is blind, he doesn't have to file a return because his gross income isn't more than $7,900.
There are also certain benchmarks the IRS sets for dependents who made a certain amount of unearned income as well, which can include money received as a gift or something as rare as a lottery prize.
For a non-blind dependent under 65 years of age, the minimum amount of unearned income that requires a tax return is $1,050. Here, too, the IRS draws an example to make the picture clearer:
Sarah is 18 and single. Her parents can claim an exemption for her on their income tax return. She received $1,970 of taxable interest and dividend income. She didn't work during the year. She must file a tax return because she has unearned income only and her gross income is more than $1,050. If she is blind, she doesn't have to file a return because she has unearned income only and her gross income isn't more than $2,600.
What About A Tax Refund?
The IRS' website contains much more information about the scenarios in which a person would have to file a tax return, even if they are a dependents. Regardless of what the rules are about having to file, though, any filer — dependent or not — is entitled to claiming money that the government owes them.
If a recent college graduate, for example, lives with his parents but had taxes withheld from his entry level job's salary, that recent grad could still be due for a significant refund check, depending on how much he was taxed during a calendar year.
The IRS go as far as advising that "even if a dependent doesn’t meet any of the filing requirements discussed earlier, he or she should file a tax return" if taxes were withheld from their income or if the dependent is qualifies for other benefits like the earned income credit.
The bottom line? If the government owes you money, you're entitled to get it back, even if your parents claim you as a dependent.