If you're someone else's dependent, it doesn't mean that you don't have to file a tax return or that you can't claim a refund you're entitled to. But it could potentially make that refund a little less. When someone claims you as a dependent, you can't claim yourself. This means that you might have to pay taxes on more of your earnings.
If you earned more than $5,700 as reported on a W-2 form during the tax year, you must file a tax return, even if you're someone else's dependent. Unearned income counts as well, so even if you earn less than $5,400, if you have unearned income from dividends or interest over $300, the IRS requires you to file a return and claim that income. You'll probably want to file even if you don't reach these income levels, however. No matter how little you earn, if your employer withheld any income tax from your paychecks, you can't get a refund from the Internal Revenue Service unless you file.
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Effect On Your Refund
If someone can claim you as a dependent, the IRS won't allow you to take a standard deduction on your tax return. The standard deduction is $5,800 as of the time of publication and increases intermittently to keep up with inflation. If your overall income for the tax year is $10,000 and you can claim this deduction, you would only have to pay taxes on $4,200. But because you can't claim it, you must pay taxes on the entire $10,000. IRS refunds result when your employer withholds more taxes from your paychecks than you need to cover your tax bill at the end of the year. If your tax bill increases because you can't claim this deduction, your refund might decrease. You can balance this by having your employer withhold more from each paycheck. If someone relies on you for support, such as if you have your own child, you can't claim a dependency exemption for her either.
When You’re Not a Dependent
The more you earn, and depending on what you do with your money, the less likely it becomes that you will be anyone's dependent. For your parents to claim you, they must provide more than half your support for the tax year. You must also be younger than 19 years old, or 24 years old if you're a full-time student. If you're 18 years old, have graduated from high school, work full time and give your parents money regularly toward room and board, you probably won't qualify as their dependent, even though you're younger than 19. If you don't qualify, you can claim a standard exemption and your refund would not be affected at all.
Dependents are not always a taxpayer's children. Adult dependents who are qualifying relatives cannot earn more than the amount of the taxpayer's dependency exemption during the tax year. The dependency exemption is less than the standard deduction. In this case, the effect on your refund of not being able to claim a standard deduction would be minimal because you didn't earn very much.