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previous page Previous Page: Publication 17 - Your Federal Income Tax - Tax Figured by IRS
next page Next Page: Publication 17 - Your Federal Income Tax - Parent's Election To Report Child's Interest and Dividends
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pub17/p17-166.htm#en_us_publink100034761

Chapter 31
Tax on Investment Income of Certain Children(p208)

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What's New(p208)


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Increase in age of children whose investment income is taxed at parent's rate.(p208)

The investment income of certain children under age 18 at the end of the year continues to be taxed at the parent's tax rate. But this rule now also applies in certain cases to a child who either:
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This chapter discusses the following two rules that may affect the tax on investment income of certain children.
  1. If the child's interest and dividend income (including capital gain distributions) total less than $9,000, the child's parent may be able to choose to include that income on the parent's return rather than file a return for the child. (See Parent's Election To Report Child's Interest and Dividends, later.)
  2. If the child's interest, dividends, and other investment income total more than $1,800, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. (See Tax for Certain Children Who Have Investment Income of More Than $1,800, later.)
For these rules, the term "child" includes a legally adopted child and a stepchild. These rules apply whether or not the child is a dependent.

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Useful items

You may want to see:


Publication
 929 Tax Rules for Children and Dependents
Form (and Instructions)
 8615: Tax for Certain Children Who Have Investment Income of More Than $1,800
 8814: Parents' Election To Report Child's Interest and Dividends
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Which Parent's 
Return To Use(p208)


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If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the child's investment income. The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Certain Children Who Have Investment Income of More Than $1,800.
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Parents Who Do Not File a Joint Return(p208)


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For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax.
Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends.
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Parents are married.(p208)


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Parents are married.

If the child's parents file separate returns, use the return of the parent with the greater taxable income.
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Parents not living together.(p208)
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If the child's parents are married to each other but not living together, and the parent with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income.
For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in chapter 2.
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Parents are divorced.(p208)


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Parents are divorced.

If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the custodial parent) has not remarried, use the return of the custodial parent.
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Custodial parent remarried.(p208)
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If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. Do not use the return of the noncustodial parent.
If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies.
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Parents never married.(p208)


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If a child's parents did not marry each other, but lived together all year, use the return of the parent with the greater taxable income. If the parents did not live together all year, the rules explained earlier under Parents are divorced apply.
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Widowed parent remarried.(p208)


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Widowed parent remarried

If a widow or widower remarries, the new spouse is treated as the child's other parent. The rules explained earlier under Custodial parent remarried apply.
previous pagePrevious Page: Publication 17 - Your Federal Income Tax - Tax Figured by IRS
next pageNext Page: Publication 17 - Your Federal Income Tax - Parent's Election To Report Child's Interest and Dividends
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication