Question

Kiddie Tax - File their own or add on to yours?

Forum|Forum|4 years ago
February 3, 2022
1 reply
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My son has no earned income. However he got $2,207 worth of dividends, capital gain etc (unearned income). He has no federal taxes withholding. It says he can add his $2,207 to ours. So he has hit the $1,100 limit of the "kiddie tax" where he has to file. Also crossed the $2,200 which means it won't be zero on the extra 8615 form. Should I add his to ours, given we made $40,000 which puts us in the 12% bracket or file his own? Seems like adding the $2,207 would be worse adding to ours due to we claimed him and passed the standard deduction $15,000 ago, than filing on his own due to the "kiddie tax" 8615 form

M

Mike9241

you didn't provide enough info so here is the form 8615 instructions for who must file

with 8615 $7 is taxed at the parent's marginal rate taking into a/c the preferred tax rate for Long Term Capital Gains and Qualified Divdiends (max tax about $2 to $3) $1100 is tax based on child's rate. you did not provide info so as an estimate the $1100 (again LTCG and Qualified Dividend rates may apply) so the tax could range from $0 to about $111.

thus the tax on his income can range from about $0 to about $114

if the income isn't reported on the parent's return form 8615 must be filed for any child who meets all of the following conditions.
1. The child had more than $2,200 of unearned income.
2. The child is required to file a tax return. (yes because unearned income over $1100)
3. The child either:
a. Was under age 18 at the end of 2021

b. Was age 18 at the end of 2021 and didn’t have earned income that was more than half of the child's support, or
c. Was a full-time student at least age 19 and under age 24 at the end of 2021 and didn’t have earned income that was more than half of the child's support.
4. At least one of the child's parents was alive at the end of 2021.
5. The child doesn’t file a joint return for 2021.

now if your report his income

$7 gets taxed at your marginal rate rate

$1100 isn't taxed

the tax on the remaining $1100 is $110

to qualify to use form 8814

your child must meet all of the following conditions.
• The child was under age 19 (or under age 24 if a full-time student)
at the end of 2021. “Student” is defined below.
• The child’s only income was from interest and dividends, including
capital gain distributions and Alaska Permanent Fund dividends.
• The child’s gross income for 2021 was less than $11,000.
• The child is required to file a 2021 return.
• The child does not file a joint return for 2021.
• There were no estimated tax payments for the child for 2021
(including any overpayment of tax from his or her 2020 return
applied to 2021 estimated tax).

that $7 of your sons's income is treated as yours and that can affect other items on your return.

so you may want to try a joint return without your son's income. then add your son's income (form 8814 is where it's entered) to see what it costs in additional taxes and compare the increase to the taxes on your son's return would be.

T

timolsenAuthor

Thank you. The dividend etc 1099 composite forms won’t be available from Ameriprise until 2/15. Since this was the first year I’m doing my own I have done everything else, but the stocks etc and was just planning ahead when time came to finish after I got the final sheets, but I knew my son’s number from the end of year statement and wasn’t quite clear which would be better of the 2 ways on kiddie tax since looking back at the previous 7 years of his life and he had never broke the kiddie tax limit. So hopefully thats the answer I need, either way it provided more info (at least that I didn’t know, the other form besides the 8615) to help. The final verdict is coming.

Thanks

Tim