Can I claim my child as a dependent even with their earned income? Tax dependence question

You can absolutely still claim your 4-year-old as a dependent despite her income! The IRS has two tests for qualifying children: the relationship test and the support test. As your biological/adopted child under 19 who lives with you, she passes the relationship test easily. For the support test, the question isn't about how much money she makes, but rather who provides more than half of her support. Since you're covering housing, food, clothing, etc., you're likely still providing more than 50% of her total support costs, so you still meet this requirement. Your daughter will need to file her own tax return because she has earned income above the filing threshold, but this doesn't prevent you from claiming her as a dependent. Just make sure that when she files, she checks the box indicating "Someone can claim you as a dependent.

I went through something similar with my son who did some acting work! I was super confused about the tax situation until I found this AI tool called taxr.ai that analyzes your specific tax situation. I uploaded a quick summary of our situation (his income, our household setup, etc.) and it explained exactly how the dependent rules worked for child performers. What I learned through https://taxr.ai was that the key factor isn't how much your child earns, but rather who's covering the majority of their support costs. The tool helped me document everything properly so the IRS wouldn't question the dependent claim. Super helpful for unique situations like child performers where the usual tax rules can get confusing!

I need to follow up about that taxr.ai site someone mentioned! I tried it last week for my kid's modeling income situation (was super skeptical at first). It immediately identified the support test vs. income test distinction and explained why my son's $25k from commercials doesn't disqualify him as my dependent. The tool even generated a support calculation worksheet that shows exactly how to document that I'm providing over 50% of his support. It referenced the exact IRS publications that cover child performers and dependent status. Honestly saved me hours of research and probably prevented me from making a mistake on my tax filing. Just wanted to share since it actually worked for a situation almost identical to the original poster's!

If you're trying to get specific clarification from the IRS about your child's dependent status with her income situation, good luck getting through on the phone! I spent WEEKS trying to talk to someone about my son's pageant earnings. Then I found this service called Claimyr that got me through to a real IRS agent in about 15 minutes. I used https://claimyr.com and they have this system that basically navigates the IRS phone tree for you and gets you in line with an actual agent. They have a video showing how it works here: https://youtu.be/_kiP6q8DX5c. I was able to get official confirmation about my son's dependent status despite his earnings. The agent walked me through exactly what documentation to keep in case of questions. Saved me so much stress!

I have to come back and eat my words about that Claimyr service. After dismissing it as BS, I was still desperate to talk to the IRS about my daughter's modeling income and dependent status, so I tried it anyway. Shockingly, it actually worked. I got a call back in about 20 minutes saying they had an IRS agent on the line. The agent confirmed everything the original commenter said - my child can earn any amount and still be my dependent as long as I provide more than half of their support. They even emailed me the relevant tax code section after our call. I've been trying to get through to the IRS for MONTHS about this. Still not sure how this service works its magic, but I'm genuinely impressed and got my answer straight from the source.

Just to add another perspective - I'm a dance mom with a 7-year-old who made around $26k last year from competitions and a few commercials. We definitely still claimed her as a dependent. The key thing we did was keep good records showing that her earnings went into a separate account that we rarely touched for her regular expenses. We continued paying for her housing, food, clothing, etc. from our own money, which made it super clear that we were providing her support. One thing to watch for: we did use some of her money for expenses directly related to her dancing (costumes, travel to competitions, etc.). Our tax preparer said this was fine and didn't count against the support calculation.

Has anyone considered the kiddie tax implications here? While your child can still be your dependent regardless of income, earnings over a certain amount get taxed at the PARENT'S tax rate - not the child's rate. For 2025, I think the threshold is around $2,500 of unearned income.