Tax Q & A: Children’s Income

This daily tax season column publishes questions from readers and answers from local members of the California Society of Certified Public Accountants.

Q: I have in the past claimed my two children as dependents. During 1998, they earned approximately $3,000 each from part-time employment. Since they are both teenagers and full-time students and I provided more than half their living costs, I intend to claim them as dependents again for 1998. How do I proceed to get their withholdings recouped? And what is recoverable--just income taxes, or are state disability and Social Security taxes subject to recovery?

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A: A child may earn up to $4,250 and still not have enough taxable income to require filing a tax return. However, that’s the only way your children will be able to receive a refund of the federal and state taxes that were withheld. Disability (SDI) and Social Security (FICA) taxes are not refundable.

Each child must file his or her own return. As a parent, you are only allowed to include a child’s income on your own return if the child is under 14 and had only investment income, rather than earned income. --PATRICIA CAIN, CPA, Pasadena

For more information on taxes and to see other questions and answers in this series, go to The Times’ Web site at http://161.35.110.226/taxes. To find a CPA, visit the California Society of CPAs at https://www.calcpa.org.