How to file tax for my kid? file seprately or include in my tax return?
Posted on October 24, 2009 by admin
yhooiscool asked:
My kid has about $1700 LT capital gain, $250 Interest and $150 dividend. What is the best way to handle this situation?
My kid has about $1700 LT capital gain, $250 Interest and $150 dividend. What is the best way to handle this situation?
1. Include everything in my tax return?
2. File separately?
Please advise with pros and cons.
Thanks.
You file a return for him.
The LTCG requires that you do a schedule D IN HIS SSN.
If your child is under 18, you must attach an 8615 since the total investment income is above $1700 and enough to trigger kiddie tax.
If you goof and put the income on your return your son will get a nasty letter in 9 months asking why the proceeds weren’t on his return and the IRS will use a basis of ZERO and a short term holding period.
Child files own tax return using his social security number but does not claim his own exemption. It will be taxed at the parents tax bracket.
You need to file a return for him. The provision that allows parents to include their children’s income on the parent’s return applies only to interest and dividends.