Standard Deduction and Personal Exemption for Minors


By Kaye A. Thomas
Updated March 5, 2009

Most minors claim a reduced standard deduction and no personal exemption.

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 ($950 for 2009), or
  • The child's earned income plus a base amount ($300 for 2009), but not more than the regular standard deduction for a single person ($5,700 for 2009).

Here's a way to make sense of this rule. Your dependent child's standard deduction starts at $950 and stays there if all the child's income is unearned income. When your child begins to have earned income, the first $650 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

The personal exemption is another fairly hefty deduction: $3,650 for 2009. Unfortunately, a child can't claim a personal exemption if someone else is entitled to claim the exemption. That's true even if the other person doesn't actually claim the exemption. The mere fact that someone else qualifies for the exemption is enough to disqualify the child from claiming it.

You can't give a personal exemption to your dependent child by not claiming it, but you may be able to help your child claim an education credit (Hope scholarship credit or lifetime learning credit) by not claiming the exemption. This can be a good idea if the child gets more benefit from the education credit than you can get from the exemption.