IRS Publication 929 – Navigating tax rules for children and dependents can be complex, but it’s essential for parents, guardians, and taxpayers to understand these guidelines to ensure compliance and optimize tax benefits. In 2025, the IRS provides clear rules on who qualifies as a dependent, when dependents must file a tax return, standard deductions, and special taxes like the kiddie tax on unearned income. This article breaks down the key aspects based on the latest IRS guidelines, helping you make informed decisions for your family’s taxes.
Whether you’re dealing with a child’s investment income, scholarship funds, or simply determining if your college student qualifies as a dependent, these rules impact filing status, deductions, and potential tax liabilities. Let’s dive into the details.
Who Qualifies as a Dependent in 2025?
The IRS defines dependents in two main categories: qualifying children and qualifying relatives. Claiming a dependent can provide tax credits like the Child Tax Credit (up to $2,200 per qualifying child) and affect your filing status and standard deduction. To claim someone, they must meet specific tests, and you generally can’t claim a dependent if you (or your spouse, if filing jointly) are claimed as a dependent by someone else.
Qualifying Child Rules
A qualifying child must satisfy all five tests:
- Relationship Test: The child must be your son, daughter, stepchild, foster child, sibling, stepsibling, or a descendant (e.g., grandchild, niece, or nephew).
- Age Test: The child must be under 19 at the end of 2025, under 24 if a full-time student for at least five months of the year, or any age if permanently and totally disabled.
- Residency Test: The child must live with you for more than half the year (exceptions include temporary absences like school, medical care, or military service).
- Support Test: The child can’t provide more than half of their own support (including food, housing, education, and medical expenses).
- Joint Return Test: The child can’t file a joint tax return with a spouse, unless it’s only to claim a refund of withheld or estimated taxes.
If a child qualifies for more than one taxpayer (e.g., divorced parents), tiebreaker rules apply: priority goes to the parent, then the parent with the longest residency, higher adjusted gross income (AGI), or other factors.
Qualifying Relative Rules
A qualifying relative doesn’t need to be a child but must meet four tests:
- Not a Qualifying Child Test: They can’t be anyone’s qualifying child.
- Relationship or Household Test: They must be related to you (e.g., parent, grandparent, aunt/uncle, or in-law) or live with you all year as a household member (without violating local laws).
- Gross Income Test: Their gross income must be less than $5,200 for 2025.
- Support Test: You must provide more than half of their total support.
Additional rules include U.S. citizenship or residency requirements (U.S. citizen, resident alien, national, or resident of Canada or Mexico). Special provisions apply for divorced or separated parents, kidnapped children, and multiple support agreements.
Filing Requirements for Dependents in 2025
Not all dependents need to file a tax return, but they must if their income exceeds certain thresholds. Use these guidelines to determine if a dependent (child or otherwise) needs to file Form 1040.
Thresholds for Single Dependents (Under 65 and Not Blind)
- Unearned income (e.g., interest, dividends) > $1,350.
- Earned income (e.g., wages, tips) > $15,750.
- Gross income > the larger of $1,350 or earned income (up to $15,300) + $450.
Thresholds for Married Dependents (Under 65 and Not Blind)
- Gross income ≥ $5 if spouse files separately and itemizes deductions.
- Unearned income > $1,350.
- Earned income > $15,750.
- Gross income > the larger of $1,350 or earned income (up to $15,300) + $450.
Adjustments apply if the dependent is 65 or older and/or blind: thresholds increase by $2,000 per qualifier (e.g., +$2,000 for age 65, another +$2,000 if blind). Dependents must also file if they owe special taxes (e.g., alternative minimum tax, household employment taxes) or received certain distributions like advance premium tax credits.
Even if not required, filing may be beneficial to claim refunds for withheld taxes or credits.
Standard Deduction for Dependents in 2025
Dependents get a limited standard deduction to reduce taxable income. For 2025, it’s the greater of:
- $1,350, or
- Earned income + $450 (but not exceeding the standard deduction for their filing status, e.g., $15,750 for single filers).
If 65 or older and/or blind, add $2,000 per qualifier. Dependents can itemize deductions if it results in a lower tax bill, but the standard amount is often sufficient for children with minimal income.
Tax on Unearned Income: The Kiddie Tax in 2025
The “kiddie tax” prevents parents from shifting investment income to children to take advantage of lower tax rates. It applies to unearned income (e.g., interest, dividends, capital gains) over $2,700 for qualifying children.
Who It Applies To?
- Children under 18 at the end of 2025.
- Children age 18 with earned income ≤ half their support.
- Full-time students ages 19-23 with earned income ≤ half their support.
The child must have unearned income > $2,700, be required to file a return, have at least one living parent, and not file jointly.
How the Kiddie Tax Is Calculated?
- First $1,350 of unearned income: Tax-free (standard deduction).
- Next $1,350: Taxed at the child’s rate (usually 10%).
- Excess over $2,700: Taxed at the parent’s marginal rate (up to 37%).
Use Form 8615 to compute and attach to the child’s Form 1040. The child may also owe the 3.8% Net Investment Income Tax (NIIT) if applicable.
Parent’s Election to Report Child’s Income
If a child’s gross income is solely from interest and dividends (including capital gain distributions) and totals less than $13,500, parents can elect to report it on their return using Form 8814. This avoids the child filing separately, but the parent pays tax on the income over $2,700 at their rate. Requirements include the child being under 19 (or 24 if a student), no estimated payments or withholding on the income, and no joint return.
This option simplifies filing but may increase the parent’s AGI, affecting other deductions or credits.
Conclusion
IRS tax rules for children and dependents in 2025 emphasize accurate reporting to avoid penalties while maximizing benefits like the Child Tax Credit. Always consult the latest IRS publications or a tax professional for personalized advice, as rules can change with legislation like the One Big Beautiful Bill Act. By understanding qualifying criteria, filing thresholds, and the kiddie tax, you can ensure your family’s tax strategy is efficient and compliant.
FAQs About Tax Rules for Children and Dependents
What is the gross income limit for a qualifying relative in 2025?
Less than $5,200.
Does a full-time college student count as a dependent?
Yes, if under 24 at year-end and meets other qualifying child tests.
When does the kiddie tax apply in 2025?
For unearned income over $2,700 on qualifying children under 18 (or up to 23 if students).
Can a dependent claim the standard deduction?
Yes, but it’s limited to the greater of $1,350 or earned income + $450 (capped at $15,750 for singles).
What form do I use for the kiddie tax?
Form 8615, attached to the child’s tax return.