Tax Rules for Children Who Have Investment Income
IRS Tax Tip 2013-38, March 21, 2013
Some children receive investment income and are required to file a federal tax return. If a child cannot file his or her own tax return for any reason, such as age, the child's parent or guardian is responsible for filing a return on the child’s behalf.
There are special tax rules that affect how parents report a child’s investment income. Some parents can include their child’s investment income on their tax return. Other children may have to file their own tax return.
Here are four facts from the IRS about the taxability of your child’s investment income.
- Investment income normally includes interest, dividends, capital gains and other unearned income, such as from a trust.
- Special rules apply if your child's total investment income is more than $1,900. The parent’s tax rate may apply to part of that income instead of the child's tax rate.
- If your child's total interest and dividend income is less than $9,500, you may be able to include the income on your tax return. See Form 8814, Parents' Election to Report Child's Interest and Dividends. If you make this choice, the child does not file a return.
- Your child must file their own tax return if they received investment income of $9,500 or more. File Form 8615, Tax for Certain Children Who Have Investment Income of More Than $1,900, with the child’s federal tax return.
For more information on this topic, see Publication 929, Tax Rules for Children and Dependents. This booklet and Forms 8615 and 8814 are available at IRS.gov. You may also have them mailed to you by calling 800-TAX-FORM (800-829-3676).
Additional IRS Resources:
- Publication 929, Tax Rules for Children and Dependents
- Form 8814, Parents' Election to Report Child's Interest and Dividends
- Form 8615, Tax for Certain Children Who Have Investment Income of More Than $1,900