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IRS.gov Website
Publication 17
taxmap/pub17/p17-166.htm#en_us_publink1000174260

Parent's Election To Report Child's Interest and Dividends(p209)

rule
You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. If you do, your child won't have to file a return.
You can make this election only if all the following conditions are met. These conditions are also shown in Figure 31-A later.
taxmap/pub17/p17-166.htm#en_us_publink1000174262

Certain January 1 birthdays.(p210)

rule
A child born on January 1, 1998, is considered to be age 19 at the end of 2016. You can't make this election for such a child unless the child was a full-time student.
A child born on January 1, 1993, is considered to be age 24 at the end of 2016. You can't make this election for such a child.
taxmap/pub17/p17-166.htm#en_us_publink1000174263

Full-time student.(p210)

rule
A full-time student is a child who during some part of each of any 5 calendar months of the year was enrolled as a full-time student at a school, or took a full-time on-farm training course given by a school or a state, county, or local government agency. A school includes a technical, trade, or mechanical school. It doesn't include an on-the-job training course, correspondence school, or school offering courses only through the Internet.
taxmap/pub17/p17-166.htm#en_us_publink100046612

How To Make the Election(p210)

rule
Make the election by attaching Form 8814 to your Form 1040. (If you make this election, you can't file Form 1040A or Form 1040EZ.) Attach a separate Form 8814 for each child for whom you make the election. You can make the election for one or more children and not for others.
taxmap/pub17/p17-166.htm#en_us_publink1000174265

Effect of Making the Election(p210)

rule
The federal income tax on your child's income may be more if you make the Form 8814 election.
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Rate may be higher.(p210)

rule
If your child received qualified dividends or capital gain distributions, you may pay up to $105 more tax if you make this election instead of filing a separate tax return for the child. This is because the tax rate on the child's income between $1,050 and $2,100 is 10% if you make this election. However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions.
taxmap/pub17/p17-166.htm#en_us_publink1000174267

Deductions you can't take.(p210)

rule
By making the Form 8814 election, you can't take any of the following deductions that the child would be entitled to on his or her return.
taxmap/pub17/p17-166.htm#en_us_publink1000174268

Reduced deductions or credits.(p210)

rule
If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return including the following.
taxmap/pub17/p17-166.htm#en_us_publink1000174269

Penalty for underpayment of estimated tax.(p210)

rule
If you make this election for 2016 and didn't have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to a penalty. If you plan to make this election for 2017, you may need to increase your federal income tax withholding or your estimated tax payments to avoid the penalty. See chapter 4 for more information.
taxmap/pub17/p17-166.htm#en_us_publink100046615

Figure 31-A. Can You Include Your Child's Income On Your Tax Return?

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