by Moe Zilla

Created on: March 02, 2010   Last Updated: March 15, 2010

Even though the dependent is "generally" responsible for filing their own return, parents are allowed to sign the child's name for them if they add the word "by" and then their own signature (according to IRS guidelines). This signature allows a parent to be the IRS's contact for the child - but they can't "legally bind the child to a tax liability." In fact, the IRS protects the child's information from the parent who files on their behalf.  Parents are limited to simply providing the information on the return - and paying their tax!

So how hard is it to file a dependent's tax return? William Perez said it best. The only real difference is that a dependent isn't allowed to claim their own personal exemption. But "The rest of the 1040EZ form is just math to calculate any tax refund..."

But first determine whether your dependent even needs to file a return. The IRS provides a table showing how much income can be earned before the dependent has to file a return. (If they're younger than 65, the threshold is $5,700, though it's even higher if the dependent is blind.) Just remember that threshold is much, much lower if the dependent's income is considered "unearned".  For example, if a dependent's income comes from lots of interest and dividends on a mutual fund portfolio, they'll have to file a return if the amount reaches more than $950. (If the dependent is under the age of 19, a parent can just claim this interest on their own return - and then the dependent doesn't have to file at all!)

There are even situations where preparing a dependent's tax return can get some money back from the government - even if they weren't required to file. If income tax was withheld from their income, then filing a return means they'll get a refund. And they'll also get a refund if they're eligible during the year for one of many tax credits - including the earned income credit. For a young dependent, this can be a great learning opportunity, since they're guaranteed to get a reward for filing their tax return!

So go ahead and file the tax return - just like a regular tax return. There's just one other difference. When looking up the standard deduction, the amount for dependents is often much lower. It's either $950 or the individual's earned income plus $300 (up to the amount of a regular standard deduction). This means it can rise up as high as $5,700, but the deduction is even higher if they're over the age of 65 (or if they're blind). There's additional credits if the dependent paid real estate taxes to the state (or locally), or has a loss from a federally-declared disaster.

And there's even an increase in the deduction if your dependent purchased a new car after February 16!

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