If a child has only $4,000 of unearned income, is the child required to file a tax return?
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Yes, a child with only $4,000 of unearned income in 2025 is required to file a federal income tax return.
Legal Analysis
1. Filing Requirement for Dependents with Unearned Income
The IRS requires a dependent child to file a tax return if their unearned income exceeds a certain threshold. For 2025, the threshold for unearned income is $1,350 for single dependents under age 65. Unearned income includes interest, dividends, capital gains, and similar investment income.
- Source: "You must file a return if your unearned income was more than $1,300" (2024), and for 2025, this threshold is $1,350.
2. Definition of Unearned Income
Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually performed. It includes interest, dividends, capital gains, and income from trusts.
3. Application to the Scenario
- The child has $4,000 of unearned income.
- This amount exceeds the $1,350 threshold for 2025.
- Therefore, the child is required to file a tax return.
4. Kiddie Tax Considerations
Additionally, because the child’s unearned income exceeds the “kiddie tax” threshold ($2,700 for 2025), the portion above $2,700 will be subject to tax at the parent’s marginal rate.
5. No Earned Income
Since the child has only unearned income, the earned income thresholds do not apply.
IRS Publication 501 and the standard deduction tables confirm that a dependent with unearned income over $1,350 in 2025 must file a return.
6. Conclusion
A child with $4,000 of unearned income in 2025 is required to file a federal income tax return, because this amount exceeds the $1,350 unearned income threshold for dependents. In addition, the portion of unearned income above $2,700 will be subject to the kiddie tax at the parent’s rate.
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