Discussion:Kiddie tax
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Discussion Forum Index --> Tax Questions --> Kiddie tax
| 7 March 2006 | |
| I would like to avoid having a minor child file his own Form 1040, but there are issues that I think may require a separate return:
1. When a child sells securities, can the parents report the transaction on their own Schedule D, if they are filing Form 8814? There doesn't seem to be any way to put this on Form 8814. 2. When a child pays a foreign tax on dividends, can the parents report the child's income on Form 8814 and file Form 1116 as part of their own return? If not, can they take the tax as their own itemized deduction? | |
| 8 March 2006 | |
| You did not tell us how old the child is. I wrote to a client yesterday about this issue. Here it is:
As to filing requirements, a dependent child must file a return if the individual: · Has unearned income over $800 · Has over $5000 of earned income · Has a total of unearned and earned income which exceeds the larger of (a) $800 or (b) earned income (up to $4750) plus $250. If the dependent child is under age 14, an election can be made to pick up the income on the parents’ return. If the kids are 14 or over, they are required to file a separate return if the meet any of the three criteria listed above. “Under 14” is determined at the close of the taxable year. | |
| 8 March 2006 | |
| In this case the child's income cannot be reported on the parent's return. To do so, the child's income must be limited to interest, dividends, and capital gains distributions. In the situation above the child had security sales. | |
| 8 March 2006 | |
| Because of condition #1, a child has to file his/her own return. If under age 14, file Form 8615 using parents' tax rate. | |
Abe@ahbcpa.net (talk|edits) said: | 24 March 2006 |
| I have a Kiddie Tax question, child has $50,000 short-term gai. I planned on filing a seperate return. Child is 9 years old.
Parent wishes to give up exemption and dependecy status on his return in order to push child into lower tax bracket (parent is in 35% marginal rate). Does this sound like it will work? | |
| 1 April 2006 | |
| Don't Know. I have a followup Kiddie Tax Question. I have an 8 year old that has long term capital gains of 12,000. It appears that the child can't file form 8614. Plus, the long term gain is taxed at parents marginal rate of 36% and not the capital gain rate of 15%.
Is this correct? | |
Landon5784 (talk|edits) said: | 22 March 2008 |
| Was looking at this old post because I had a kidde tax question:
FLRCPA...is incorrect..if the child files his own return, which he must because of the Capital Gain (from security sales) then the child would attach Form 8615 to his return and the childs capital gains would max out at 15%, the parents maximum capital gains rate, not the parents marginal tax rate. Any way you slice it capital gains max at 15% and the 8615 does this if you follow the flow of the forms calculations. | |
| 14 January 2009 | |
| Thank you very much Vsm.
Could we say that it is subject to SE tax, set up a SEP IRA for the wife and child, switch the ownership percentage to something like 45%-wife, 45%-child, 10% father(orthodontist). Reducing the father's interest in order to increase SE earnings available for SEP contribution. We would sacrifice the SE tax savings to save income tax at the highest rate. Just something I thought about. Is K-1 income considered investment income for kiddie tax purposes? I don't think it is. | |
| 14 January 2009 | |
| Disregard the above entry. It relates to a different discussion. | |
