Most minors claim a reduced standard deduction.
Standard deduction
Minor children, like other taxpayers, have a choice between claiming itemized deductions or the standard deduction. Children usually have a small amount of itemized deductions or none at all, so in most cases they claim the standard deduction.
A taxpayer that isn’t a dependent of any other taxpayer gets a standard deduction in a fixed amount, depending on filing status. (It’s adjusted each year for inflation.) For a dependent child, the size of the standard deduction depends on how much earned income the child has (as opposed to investment income, which is considered unearned income for this purpose).
This complicated rule says your child’s standard deduction is the greater of the following two amounts:
- the minimum standard deduction ($1,250 for 2023), or
- The child’s earned income plus a base amount ($400 for 2023), but not more than the regular standard deduction for a single person ($13,850 for 2023).
Visit our Reference Room to obtain these figures for other years.
Here’s a way to make sense of this rule. Your dependent child’s standard deduction starts at $1,250 and stays there if all the child’s income is unearned income. When your child begins to have earned income, the first $850 will not cause any increase in the standard deduction — but after that, each additional dollar earned will increase the standard deduction by a dollar (effectively making the earnings tax-free) until the standard deduction reaches the amount that would be allowed if your child were not a dependent.
Personal exemption
Prior to 2018, the tax law prevented a child from claiming a personal exemption deduction if someone else was entitled to claim the child as a dependent. This issue is now a moot point, as Congress has eliminated the personal exemption deduction for all taxpayers for the years 2018 through 2025.