25 Questions
Under what conditions can parents elect to include a child's income on their own tax return?
If the child's only income is from interest and dividends
True or false: If a child has any income, their parent is always liable for paying taxes on that income.
False
True or false: If a child earns income, the parent is always liable for the tax if the child doesn't pay it.
False
True or false: If a child's only income is from interest and dividends, the parents are not liable for the tax if the child fails to pay it.
False
What types of income are considered unearned income?
Interest, dividends, and rents
True or false: Parents can include their child's income on their own tax return if the child is a part-time student over the age of 24.
False
True or false: A child is always responsible for filing their own tax return and paying any tax due.
True
How is unearned income taxed compared to earned income?
It is taxed at a lower rate
Who is liable for a child's income tax if the child doesn't pay it?
The child's parent
Which of the following is an example of unearned income?
Dividends from stocks
True or false: Children who only earn interest and dividends are always exempt from filing their own tax return.
False
When can dependents be required to file a tax return?
If they have more than $1,000 in unearned income
What is considered earned income according to the IRS?
Income from services performed by an individual
True or false: Dependents are always required to file a tax return.
False
Are a child's earnings included in their parent's gross income?
No, never
What publication contains more information about tax rules for children and dependents?
Pub) 929, Tax Rules for Children and Dependents
True or false: Naturalization is the only way to obtain US citizenship.
False
Does earned income only apply to traditional jobs?
No, earned income can also include net earnings from self-employment
What taxes are earned income subject to?
Federal, state, and local income taxes
What tax benefit is available to low- and moderate-income workers with children?
Earned Income Tax Credit
What is the definition of earned income?
Income received for work that you do
What is an example of unearned income?
Rental income from a property
Are earned income and unearned income subject to the same tax rates?
No, earned income and unearned income have different tax rates and implications
Can unearned income be subject to state and local taxes?
No, unearned income is only subject to federal income taxes
What is an example of earned income?
Wages from a job
Study Notes
- US citizenship can be obtained by birth or naturalization
- Dependents may need to file a tax return based on certain conditions
- Parents or guardians may need to file a tax return for a dependent child
- A child's earnings are included in their own gross income, not their parent's
- If a child doesn't pay tax on their income, the parent is liable
- Parents can elect to include a child's income on their own tax return under certain conditions
- This is applicable if the child's only income is interest and dividends
- The child must be under 19 or a full-time student under 24
- The election exempts the child from filing their own tax return
- More information can be found in Pub. 929, Tax Rules for Children and Dependents.
Test your knowledge on tax rules for children and dependents with this informative quiz! From understanding when a child's earnings are included in their own gross income to knowing when parents can elect to include a child's income on their own tax return, this quiz covers it all. Brush up on your tax knowledge and learn more about this topic by diving into this quiz today.
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