Resources:
Why YOU Should Care:
If your child has interest and/or dividend income, certain reporting requirements may apply. You child can file their own return (see here for more information about the filing requirements of dependent children) or, under certain circumstances, you can claim their interest and dividend income on your own return.
Reporting Child’s Interest and Dividends on the Parents’ Return
Parent may be able to claim interest and dividend income of a child on their return thus eliminating the need for the child to file. In order to do so, IRS Publication 929 provides the following conditions which must be be met:
- Your child was under age 19 (or under age 24 if full-time student) at the end of the year.
- Your child hand income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends).
- The child’s gross income was less than $9,500.
- The child is required to file a return unless you make this election.
- The child does not file a joint return for the year.
- No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was applied to this year under your child’s name and social security number.
- No federal income tax was taken out of your child’s income under the backup withholding rules.
- You are the parent whose return must be used when applying the special tax rules for children.
Making the Election
To make this election, complete Form 8814 and file with your annual tax return. Each child requires his or her own Form 8814.
Including your child’s interest and dividend income on your return means the income will be taxed at your marginal tax rate. Depending on your situation, this may be a higher rate than the child would pay if filing separately.
