What's the standard deduction amount for a dependent college student?

Thanks for the explanation, but I'm still confused about one thing. Does this mean my daughter will pay higher taxes than if she wasn't my dependent? And does her filing her own return affect my ability to claim her as my dependent?

Your daughter will pay the same tax on her earned income whether she's your dependent or not - the difference is just in the standard deduction calculation. Her filing her own return does NOT affect your ability to claim her as a dependent as long as she meets the qualifying child or qualifying relative tests (like being under 24 and a full-time student, living with you more than half the year, and you providing more than half her support). If she doesn't file her own return, she might be leaving money on the table if she had any tax withheld from her paychecks. She should definitely file to get that money back.

How accurate is this tool? I'm in a similar situation with my son who made about $8000 last year from his internship. Does it handle state taxes too or just federal?

I'm skeptical of these online tools. How does it know all the tax laws? What if it misses something that causes an audit? Did you verify the information with an actual tax professional?

The tool is incredibly accurate - it uses the same tax rules and calculations that professionals use. It pulled information directly from IRS publications to determine the dependent standard deduction rules. It handles both federal and state taxes, and even breaks down the different filing requirements for each. For your son's situation with $8000, it would calculate his standard deduction as $8,400 ($8000 + $400).

How does this actually work? Do they have some special connection to the IRS or something? I've tried calling the IRS helpline multiple times and always give up after being on hold for an hour.

This sounds too good to be true. The IRS is notorious for not answering calls, especially during tax season. Are you sure this isn't just taking your money for something you could do yourself if you were patient enough?

It works by essentially waiting on hold for you. When you use the service, they wait in the IRS phone queue on your behalf, and when they finally reach an agent, they call you and connect you directly with the IRS representative. No special connection - just a smart system that waits on hold so you don't have to. I understand the skepticism - I felt the same way! But when you consider the value of your time (I was spending hours on hold previously), it makes complete sense. You don't pay for anything the IRS should be providing for free - you're just paying to avoid the ridiculous wait times.

My daughter just has her job income from working at the campus bookstore, no investments or anything fancy. But I'm curious - what counts as "unearned income" exactly? And does scholarship money factor into any of this tax stuff? She got a partial scholarship last year.

Unearned income includes things like interest, dividends, capital gains, rents, royalties, etc. - basically money received from sources other than working a job. It's passive income rather than earned income. As for scholarships, they're generally tax-free if used for qualified education expenses like tuition, fees, books, and required supplies. However, any scholarship money used for room and board, or other non-qualified expenses would be considered taxable income. But this would be considered earned income, not unearned income, so it wouldn't trigger the kiddie tax rules. It would just be added to her regular taxable income.

The federal rules for standard deduction for dependents are the same regardless of what state they're in. But for state taxes, it gets complicated. Some states may require your son to file a return as a part-year resident or non-resident of that state if he earned money there. Most states follow similar dependent rules as federal but there are exceptions. Check both your home state and his college state rules.