There was a time when there weren't many employment opportunities for kids. Today, a sizable number of career paths have developed that give young people the chance to work part-time. But there is also a tax obligation when there is revenue. Experts in tax and investing believe that a youngster may have both earned and unearned money. Income tax returns (ITRs) may be filed in both scenarios in accordance with a specific set of guidelines for low-wage workers.
If a minor (someone under the age of 18) earns money above the tax threshold, their parent or legal guardian is responsible for filing taxes on their behalf. This is due to the absence of an age requirement for filing income tax returns.
If a minor earns more than Rs. 1500 a month in income, they are required to file their taxes. It doesn't matter whether the income was earned or not. We will explain in this post under what conditions a parent may claim his child's income tax return.
Income Sources a Minor May Receive
A minor is eligible to receive two different sources of income. Both earned and unearned money fall under this category.
Earned Cash
A minor's earnings are considered earned income if they take part in any TV programmes, contests, or sporting events and win the permitted prize money, as well as if they do so while working a half-time job or operating their own business.
Unearned cash
Unearned income is that which a minor receives as a gift for a holiday, birthday, or other special occasion from well-wishers like family members, close friends, or grandparents. Unearned income is that which a minor does not obtain through their own efforts and labour.
Important Information a Minor Should Have Before Filing Their Own Income Tax Return
Before minors file their own tax forms, it is important to explain concepts like gross income, taxable income, pension funds, medical insurance, and more.
Minors are required to sign their own tax forms.
Every financial year, children must retain a copy of their expenses and income for future reference and safety.
The returns form must contain accurate entries for the taxpayer's name and tax identification number.
Children must be made aware that tax information is very private.
The most practical and reliable way to file an ITR for minors is to use a tax specialist's services.
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