Anyone tracking income, taxes withheld, etc., for dependents?

QuickUser364623

My young adult child is a dependent on our tax returns and recently started working. I need to track income and withholding for tax-reporting purposes. I looked at my category tree and have an idea regarding what I would want, but linking it for W-2 tracking inside Quicken seems not to be feasible. What do you do, parent of working dependent(s)?

As an aside, young adult child does use Mint.com, but paychecks are being manually deposited at this time. Thanks in advance for any helpful replies.

Sherlock

If you're going to track a dependent's income, withholding, etc., I suggest you use a separate Quicken file: select File > New Quicken File...  or use a spreadsheet as they're using Mint.com. 

NotACPA

@Sherlock, I'm unsure about your advice.

Since the dependent's income and expenses are reported on the OP's tax return (at least for now) shouldn't everything be in a single QDF?

@QuickUser364623, please elaborate upon what difficulties you're having re: the W-2.  When I was doing freelance consulting, I'd sometimes have 5 or 6 W-2's in a single year... so it's certainly doable to add your child's.

q_lurker

IRS pub 501 discusses dependents. If their income is above certain levels, they must file their own return even though they are a dependent on someone else’s. I am not clear where their income is reported if income is less.  Only did a cursory search. 

Tom Young

As a practical matter, if a dependent has a W-2 job then they should always file their own income tax return.  Nine times out of ten the dependent will get all taxes withheld returned to them when they file their separate tax return.  Unless the dependent's income is somehow being considered "family income" - money deposited into a joint account of some sort that anyone in the family can can draw on - I can't see any point and certainly no necessity for a dependent's activity to be included in their parent's Quicken file.

Sherlock

NotACPA said:

@Sherlock, I'm unsure about your advice.

Since the dependent's income and expenses are reported on the OP's tax return (at least for now) shouldn't everything be in a single QDF?

@QuickUser364623, please elaborate upon what difficulties you're having re: the W-2.  When I was doing freelance consulting, I'd sometimes have 5 or 6 W-2's in a single year... so it's certainly doable to add your child's.

In my experience, a dependent's income, if filed, is filed separately.  

volvogirl

A parent (or anyone) NEVER reports a dependent's income.  It would only go on the dependent's tax return if they are required to file.  And depending on their age and if they are a full time student the parent might not even be able to claim them as a dependent if they make over $4,200 total.

Filing requirements for a dependent 

https://ttlc.intuit.com/community/children-dependents/help/do-i-need-to-file-my-own-taxes-if-i-m-a-dependent/00/26111

And see IRS Publication 501

https://www.irs.gov/pub/irs-pdf/p501.pdf

QuickUser364623

Appreciate the replies.

BTW the IRS actually has a "is this person a dependent" tool:

https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent

I have already looked at the IRS Publication 501 and 17 as well, which redundantly restate the same test for dependency. It looks like there is a decent chance adult child will cross the IRS filing threshold, but I was thinking to have them file even if they came up short.

Quicken has tax form line items, and while I have never done direct importing from Quicken to TurboTax, I do rely on Quicken to help with the filing and to-date I have never had to worry about my numbers and my wife's numbers getting combined with adult child's numbers. The default Quicken account tree has mappings to IRS form lines, and I was recording adult child's income as "other income" with a special tag because that was an existing category and I hadn't really thought this out as carefully as I should have. Too, adult child has bank accounts and investment accounts tracked in my Quicken file currently just because they were tracked ever since opening. I'm reluctant to start a separate Quicken file unless absolutely necessary.

Regarding alternatives, Mint.com doesn't allow transaction splits, so far as I can tell. At least the free version does not. So adult child is spreadsheeting for the moment, but I will also do something redundantly in Quicken, I just won't map the items to a 1040 or W2 line item in the software.

NotACPA

It's not OUR role, or our expertise, to give tax advice.

If the OP says that the dependent is filed on the OP's tax return ... I don't believe that we should question that.

Refer the OP to a tax professional, SURE.  But we shouldn't give tax advice.

Frankx

volvogirl said:

A parent (or anyone) NEVER reports a dependent's income.

There is an old saying "Never say never..."  which applies here (especially when you use CAPS).  The above statement is not accurate.  For at least the last 10+ years parent may elect to report a child's interest and dividend income on the parents' tax return under certain conditions using IRS Form 8814.  Look it up.

Frankx

Tom Young

@Frankx

I'm sure volvogirl was referring to "earned income" here as the OP only referred to W-2 income in their post, something which a parent should not report on their own income tax return.  I'd say 9 times out of 10 a dependent child should file their own income tax return including the unearned income if they have any, as that almost always gives a better tax result.

Frankx

@Tom Young,

I quoted volvogirl verbatim.  Like I said "Never say never" - and I could have added "especially if you are trying to talk taxes..."  And, yes there are options about when one should/would include a child's income on a parent's tax return, but that's not the point that volvogirl was making - especially since she used capital letters...  Just sayin'

Frankx

volvogirl

Yeah, I thought about interest/dividends after I posted.  

See IRS Pub 17 page 7  Certain Children Under Age 19 or Full-Time Students

https://www.irs.gov/pub/irs-pdf/p17.pdf 

If a child's only income is interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends), the child was under age 19 at the end of 2019 or was a full-time student under age 24 at the end of 2019, and certain other conditions are met, a parent can elect to include the child's income on the parent's return. If this election is made, the child doesn't have to file a return. See Parent's Election To Report Child's Interest and Dividends in chapter 29.  

Page 200 If interest & dividends income total less than $11,000, the child's parent may be able to choose to include that income  on the parent's return rather than file a return for the child. 

Tom Young

@Frankx

Oh, Frankx.  OK, "Uncle!"