Once a person has been claimed as a dependent on one tax return, that person is no longer eligible to be claimed on another return. This one statement causes many people to worry when filing a tax return for a dependent. It does not matter whether it is a dependent child or an adult. The rules still apply the same as far as filing a federal tax return is concerned.
Not all dependents need to file a return.
If the dependent has earned less than $5,700 from work or $950 from investments, it is not likely that you need to file a return. Since these numbers change almost annually, it is important that you do the research to verify the current level of income requiring a return to be filed. If your dependent has paid taxes and is due a refund, you will want to file a return.
For a dependent return, use the easiest tax form that will work.
Often, a 1040EZ will do the job for a simple dependent tax return. If the dependent only needs to report income from a W-2, this is what the 1040EZ is designed to do. If the dependent has self-employment income or significant income from interest or investments, it may require that you file a standard 1040 form. This is because the 1040EZ and 1040A do not allow enough attachment forms to compute everything that needs to be filed.
Begin the process just like you would for your own return.
Gather up all of the paperwork needed to file the return. This can include the W-2 form if that is all that is needed. For more complicated forms, you will need more information. You may need receipts for business expenses if your dependent has run a thriving yard mowing business or some other successful business activity. For investments and interest, you need the appropriate 1099 forms. At the very least, you need to be able to account for the total income and total amount of taxes already paid into the system. Once all of the information has been accumulated, determine which 1040 form that you will need for the filing. For help with this, you can go to the www.IRS.gov site and do a little research and even print the needed forms.
For filing the 1040EZ or 1040A, the effort should take about fifteen minutes or less if you understand the forms.
After filling in the name, address, and social security number information, you will want to make sure not to check the personal exemption box on the form. Since you or someone else has claimed this person as a dependent, he or she is not allowed take this exemption. Drop down and fill in the income from the W-2 forms. Add in any self-employment income that does not exceed the current limit. Follow the form and post the appropriate numbers for the standard deduction and any that are credits allowed. Add up the adjusted gross income. Subtract the allowable deductions. Use this number and look up the taxes in the table. Post any taxes already paid. Subtract the amount paid from the amount due. The final number will be either a refund or the amount owed depending on the math.
For filing the 1040 long form, you may need from a few minutes up to an hour for most dependents.
If you are filing this form, it means that your dependent has a more complicated tax situation. Without going on for many pages, it is impossible to cover every option. A few of the more common ones are easy to describe. If your dependent has significant interest or investment income, you will need at least a schedule B. For self-employment income, you will have to file a schedule C to determine the profit or loss from the business. When this form is completed, for amounts less than $600 (the current amount that is subject to change), you will need to post the result on the front of the 1040 on the line for self-employment income.
For larger amounts, you will post the total on the 1040 and on schedule SE.
This form seems more complex than it is. Fill out the form for the Social Security and Medicare taxes. You must post this amount on the back of form 1040 as a tax that is owed. One half of this amount is posted on the front of the 1040 under exclusions from income. Schedule SE will direct you to the appropriate line numbers.
After these forms are completed, you will have to evaluate whether there is more to do.
These are the most common occurrences on most tax forms including dependents. If there are more items to file, they will be very specific to your dependent. Determine the forms needed and print them from the IRS website. Another good option is to use this information and go to a site like TurboTax or TaxAct and file online.