• If you claim your children as dependents on your taxes, you can also claim a standard deduction for them. Claiming this deduction saves money on your taxes. If your child is working, in most cases the standard deduction negates his income when reporting his adjusted gross income. If your child is not working, you can still take a minimum standard deduction for him, which will help lower your total tax bill.
  
  

Minimum Standard Deduction

• Every child you claim as a dependent on your taxes gets a standard deduction. If the child has not earned any income of his own, the IRS allows you to take a deduction of $950 for him as of 2010. If your child earns less than $650 per year, you still cannot take more than the minimum standard deduction for him, according to the Fairmark Tax Guide for Investors.
  
  

Earned Income Deduction

• Your child's standard deduction grows as he earns income. The IRS uses the formula, "Earned income + base amount." As of 2010, the base amount is $300. So if your child earns more than $650, he will get a larger standard deduction. For example, if your child earns $800 for the year, his standard deduction is $1,100. In effect, this allows your child to earn money without being taxed. Any money he earns is not counted towards his taxable income because of the standard deduction, unless he makes more than the maximum deduction amount.
  
  

Maximum Deduction

• The maximum standard deduction for any child is equivalent to the standard deduction for a single adult. In 2010, single adults may claim a deduction of $5,700. In the case that a child makes more than $5,400 per year, you would only be able to claim $5,400 plus the $300 base pay as her standard deduction, and the rest of her income would be subject to taxation.