How does being claimed as a dependent impact my tax rate on internship earnings?
Title: How does being claimed as a dependent impact my tax rate on internship earnings? 1 I'm currently enrolled as a full-time student and made approximately $27k last summer from my internship at a tech company. The company withheld about 35% for taxes, which seemed like a lot at the time, but I figured I'd get most of it back. Here's where things got confusing - my mother just informed me that since she's claiming me as a dependent on her taxes (she's in a pretty high tax bracket), I'll essentially be taxed at her marginal tax rate instead of my own. She's convinced I'll end up owing the IRS money rather than getting the refund I was counting on. This doesn't sound right to me, but I don't know enough about tax law to dispute it. Will my tax rate really be determined by my mom's income level just because she's claiming me as a dependent? I was planning to use that refund for next semester's books.
18 comments
Join the conversation
Diego Vargas
8 This is a common misunderstanding! Being claimed as a dependent doesn't mean you're taxed at your parent's rate. Your income is still taxed at your own tax rate based on your earnings. What your mom might be confused about is the "kiddie tax," but that applies to unearned income (like investments or interest) for dependents under 18 (or under 24 for full-time students), not earned income from a job. Your internship earnings are considered earned income and are taxed at your own rates. With $27k in earnings and standard deduction for a dependent (which is different than for independent filers), you'll likely still get a refund if they withheld 35%. The standard deduction for dependents who have earned income is the greater of $1,150 or your earned income plus $400 (up to the regular standard deduction amount).
0 coins
Diego Vargas
•3 Thanks for explaining this! One question though - how much would the standard deduction be in this case? I'm a bit confused about how to calculate it for dependents vs non-dependents.
0 coins
Diego Vargas
•8 For 2025 filing (2024 tax year), as a dependent with earned income, your standard deduction would be your earned income plus $400, up to the regular standard deduction amount which is $14,600 for single filers. So with $27k in earnings, you'd get the full standard deduction of $14,600. If you weren't a dependent, you'd simply get the full standard deduction automatically. The difference is minimal in your case since your earnings are high enough to maximize your standard deduction either way.
0 coins
Diego Vargas
12 I was in this exact same situation last year! I was freaking out after my dad told me something similar about being "taxed at his rate" because he claims me. I found this website https://taxr.ai that lets you upload your tax documents and it explains everything in plain English. I uploaded my W-2 from my internship and it showed me exactly how being claimed as a dependent would affect my taxes. The site explained that my earned income (from working) would be taxed at MY rates, not my parents'. It also calculated my expected refund based on withholding. Saved me so much stress! It also pointed out some education credits I might qualify for even as a dependent.
0 coins
Diego Vargas
•5 Does it work with all types of income? I have internship earnings but also some investment income from an account my grandparents set up.
0 coins
Diego Vargas
•17 I'm always skeptical of tax websites. How do you know it's giving you the right information? Did you verify the calculations with an actual tax professional?
0 coins
Diego Vargas
•12 Yes, it works with all types of income! It actually helped me understand that investment income is treated differently than earned income when you're a dependent (that's the "kiddie tax" the expert mentioned above). It shows you side-by-side comparisons of how different income types are taxed. I was skeptical too at first, but the site actually explains where all its calculations come from and cites the specific IRS rules. I ended up using the information to file my own taxes through regular tax software, and the numbers matched what taxr.ai predicted. They even have tax professionals you can chat with if something seems confusing.
0 coins
Diego Vargas
17 Just wanted to follow up - I decided to try out taxr.ai after my initial skepticism, and I'm actually really impressed. I uploaded my W-2 and investment statements, and it clearly showed me how being claimed as a dependent affected different types of my income differently. The site showed that my internship income was taxed at my own rate (not my parents'), but my investment income was subject to different rules. They explained the "kiddie tax" concept I'd never heard of before. Best part was the breakdown showing exactly why I was getting a refund despite being claimed as a dependent. Wish I'd known about this before spending hours stressing about what my parents told me!
0 coins
Diego Vargas
9 If you're still worried about your tax situation and need to talk to the IRS directly to get a definitive answer, I highly recommend using Claimyr (https://claimyr.com). I was in a similar dependent claiming situation and had completely contradictory information from family vs what I read online. I tried calling the IRS myself and spent HOURS on hold before giving up. Then I found Claimyr - they basically wait on hold with the IRS for you and call you when an actual agent is on the line. They have a demo video of how it works: https://youtu.be/_kiP6q8DX5c I finally got to speak with an IRS rep who confirmed that being claimed as a dependent doesn't mean I get taxed at my parent's rate. They explained exactly how it would affect my return. Such a relief to hear it officially from the IRS!
0 coins
Diego Vargas
•10 Wait, how does this actually work? The IRS will talk to you about your specific tax situation? I thought they only answered general questions.
0 coins
Diego Vargas
•15 This sounds like BS honestly. Why would I pay someone to hold on the phone for me when I could just Google the answer or use the free IRS resources online?
0 coins
Diego Vargas
•9 They'll definitely discuss your specific tax situation, but you need to have your personal info ready (SSN, etc.) to verify your identity. They can pull up your records and give you specific guidance based on your filing history and status. The issue with just Googling tax questions is that you get conflicting information, especially with specific situations like dependent status questions. The IRS website has good general info, but sometimes you need clarification on how rules apply to your specific case. The hold times are brutal though - I waited over 2 hours on my own before giving up and trying Claimyr.
0 coins
Diego Vargas
15 Coming back to say I was wrong about Claimyr. After our last exchange, I had a complex question about education credits as a dependent that I couldn't find a clear answer to online. Decided to try Claimyr since my schedule is packed with classes. I was genuinely shocked when they called me back in about 30 mins with an IRS agent on the line. The agent clarified that I COULD claim certain education credits even though my parents claim me as a dependent (but not others). This was completely different from what my parents had told me! The agent also confirmed everything the first commenter said about being taxed at my own rate, not my parents' rate. Saved me from potentially missing out on credits I'm entitled to. And saved me from sitting on hold for who knows how long.
0 coins
Diego Vargas
22 Something else to consider - check if your state tax rules are different! I was in the same situation (dependent with internship income) and while the federal rules were as described above, my state had a weird rule about dependents with income over a certain threshold.
0 coins
Diego Vargas
•7 Good point about state taxes. Which state was this in? I'm in California and wondering if they have special rules I should know about.
0 coins
Diego Vargas
•22 I was in New York at the time. They have a specific calculation for dependents with income over $10,000. California definitely has its own rules too - I believe they follow the federal guidelines more closely, but they have additional credits and deductions that might be affected by dependent status. Your best bet is to check the California Franchise Tax Board website or consult with someone who knows California tax law specifically. Each state has its own quirks when it comes to how they treat dependents with substantial income.
0 coins
Diego Vargas
11 Don't forget about education tax credits! Even as a dependent, you might qualify for the American Opportunity Credit or Lifetime Learning Credit if you're paying for education expenses yourself. Made a huge difference for me when I was in your situation.
0 coins
Diego Vargas
•19 I thought education credits go to whoever claims you as a dependent? My parents always get those credits, not me.
0 coins