Q Around this time of the year I start thinking about taxes. How much money can my part-time working, full-time high school student make in one calendar year before she has to pay any taxes?
JON LUND
A If your child can be claimed as your dependent, then the income threshold for having to pay income tax is lower than for single individuals. Does your son or daughter only have earned income from the part-time job? For 2007, your child must pay income tax if earned income from the job (including wages and tips) was over $5,350.
Does your son or daughter have unearned income? This is income earned from investments such as taxable interest and dividends, capital gains, and distributions of unearned income from a trust. For 2007, your child must pay income tax if unearned income was over $850.
If your child has both, then you will have to follow the gross income rules. Gross income is the total of unearned and earned income, and there is a worksheet on the IRS website (www.irs.gov) called "Filing Requirement Worksheet for Most Dependents," which will guide you through the rules.
Even if your child does not have to file a tax return according to these income tests, you will still need to file in order to get the refund of any federal tax withheld from wages.
KRISTA J. ZACHMAN, CFP
Ka-Ching's financial experts at Edina-based Accredited Investors Inc. can be reached at kaching@startribune.com.
