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IRS Tax Map 2008
Current IRS Tax Map

Rev. date: 09/2006


Tax on a Child's Investment Income

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Tele-Tax Topic 553
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Part of a child's investment income may be taxed at the parent's tax rate if:
  1. The child meets one of the following age requirements:
    • The child was under age 18 at the end of the tax year
    • The child was under age 19 at the end of the tax year and the child's earned income does not exceed one-half of the child's support for the year, or
    • The child was a full-time student who was under age 24 at the end of the tax year and the child's earned income does not exceed one half of the child's support for the year (excluding scholarships)
  2. At least one of the child's parents was alive at the end of the tax year
  3. The child's investment income for the 2009 tax year was more than $1,900
  4. The child is required to file a tax return for the tax year, and
  5. The child does not file a joint return for the year
The child's tax is figured on Form 8615, Tax for Certain Children Who Have Investment Income of More Than $1,900. This form must be attached to the child's tax return.
A parent may be able to avoid having to file a tax return for the child by including the child's income on the parent's tax return. A parent can choose to do this if all of the following conditions are met:
  1. At the end of the tax year the child was under age 19 or under age 24, if a full-time student
  2. The child is required to file a return unless the parent makes this election
  3. The child had income only from interest and dividends, which includes Alaska Permanent Fund dividends and capital gain distributions
  4. The child's interest and dividend income was less than $9,500 for 2009
  5. No estimated tax payments were made for the tax year, and no prior tax year's tax overpayment was applied to the current tax year under the child's name and social security number
  6. No federal income tax was withheld from the child's income under backup withholding
  7. The child does not file a joint return for 2009
  8. The parent is the parent qualified to make the election or files a joint return with the child's other parent
If the parent does not file a joint return with the child's other parent, refer to Publication 929, Tax Rules for Children and Dependents, to find out which parent's return may include the child's income.
To make this election, attach Form 8814, Parents' Election to Report Child's Interest and Dividends, to your Form 1040.
For more information refer to Publication 929, Tax Rules for Children and Dependents. You will need this publication to complete Form 8615 if the child has capital gain distributions.