Child - investment income of $1789, dependent SSDI of $10,608

Forum|Forum|2 years ago
March 17, 2024
1 reply
0 views

My wife is on SSDI. My oldest daughter, age 12, receives money as well as a dependent, earning $10,800 in 2023

My parents think they are helping, but they are old fashioned and do not believe in 529s. Instead, it seems they have a UTMA setup for my kids, and for that oldest child, it earned $1789 in dividends in 2023, most of which is qualified, and a few dollars of interest.

She has no earned income.

Until this year, I didn't know about the UTMA, and have never reported her SSDI dependent income.

But this year, my dad shared it with me.

Can I use 8814? Or do I need to file a separate return for her because of the SSDI dependent benefits.

I'm not happy about this and wish my parents would just contribute to the 529 they have (but are against it) and I have for her.

rjs

Employee

You have to file a separate tax return for your daughter. You cannot report her income on your tax return because Social Security disability benefits is not one of the types of income that can be reported on Form 8814. She is required to file a tax return because her unearned income (investment income) is more than $1,250.

Spouse1234Author

Employee

Thank you for that. How would I go about filing the separate return for her on TurboTax? Would I do it at the end of mine, or do I have to start a whole new file?

We never reported reported to the SSDI people when our second and third child were born, since we don't know how. In many ways, that is a good thing, since if the second and third child go over $1250, I can still use Form 8414.

rjs

Employee

"How would I go about filing the separate return for her on TurboTax? Would I do it at the end of mine, or do I have to start a whole new file?"

You can't tack the child's tax return onto yours. If you are using the CD/Download Desktop TurboTax software, just start a new tax return. On the opening screen click the button that says "Start a New Return." If you already have a tax return open, on the File menu (not the File tab) select "New Tax Return." Save the new return with a different name. You can e-file up to 5 tax returns.

If you are using TurboTax Online, you have to use a different account for each tax return. A TurboTax Online account can only be used for one tax return. Create a new separate account for each child that has to file a separate return. Be careful to keep the user names straight for each account.

"We never reported reported to the SSDI people when our second and third child were born, since we don't know how."

Call Social Security (800-772-1213) to find out how to add the younger children. If SSDI is the child's only income the child does not have to file a tax return, and the child's SSDI does not get reported anywhere.

"In many ways, that is a good thing, since if the second and third child go over $1250, I can still use Form 8414."

Using Form 8414 is not necessarily an advantage. In many cases you can end up paying more tax than if you filed a separate return for the child. Except in very unusual circumstances, the only advantage is that it's less paperwork.