IRS Filing Rules

• The general IRS guidelines that dictate when you must file a tax return are fairly simply to apply, but you must evaluate your situation each tax year. For most tax-paying Americans, you must file a return when your annual income, from all sources, is greater than your standard deduction plus one personal exemption. The standard deduction you are eligible for will depend on whether you file as single, head of household or married filing jointly. However, the exemption amount is the same for all taxpayers, regardless of how you file. Even if you have no income because you haven't worked and plan on claiming your child as a dependent, you can still file taxes even when your income level doesn't exceed the filing threshold.
  
  

Other Taxable Income

• The IRS will tax more than just the income you earn from working. If you have other types of income such as gains from the sale of stock, interest earnings from a bank account or receive any other money that isn't a gift or inheritance, then you must claim this as income when determining whether to file taxes. For example, if you earn $20,000 in interest from a bank account during the year, the IRS requires that you file a tax return since the amount will exceed any possible income threshold. However, if you claim your child on your tax return, you may not have to actually make a tax payment.
  
  

Children Tax Implications

• For most parents, they will easily satisfy the IRS qualifying child requirements to claim each of them as a dependent. The benefit of doing so is that you can take one additional exemption for each of them, which essentially reduces the amount of your income subject to tax. The basic rules for claiming children as dependents is that they not provide more than half of their own support, live with you for more than half the tax year and be under the age of 19, or under the age of 24 if also a full-time student at the end of the year.
  
  

Tax Form Reporting

• Any tax year you plan on claiming your children on a tax return, you have fewer options in choosing which tax form to file with. This is because the IRS doesn't allow you to file a Form 1040EZ when claiming any dependents. Your only tax form options are the full 1040 form or the shorter 1040A.