This chapter discusses the following two rules that may affect the tax on investment income of certain children.
- If the child's interest and dividend income (including capital gain distributions) total less than $9,500, 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.)
- If the child's interest, dividends, and other investment income total more than $1,900, 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 $1,900, 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.
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 $1,900 8814: Parents' Election To Report Child's Interest and Dividendstaxmap/pub17/p17-167.htm#en_us_publink1000174246taxmap/pub17/p17-167.htm#en_us_publink1000174248
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.taxmap/pub17/p17-167.htm#en_us_publink1000174250
If the child's parents file separate returns, use the return of the parent with the greater taxable income. taxmap/pub17/p17-167.htm#en_us_publink1000174251
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.
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. taxmap/pub17/p17-167.htm#en_us_publink1000174254
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
If a child's parents have never been married to 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
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