Q. Tax benefit saving wise, is it better to have the 1099-Q address to me with my name and SS#, so I can include it in my tax return?
A. No. There is some slight tax savings if the 1099-Q is addressed to her with her SS# (she is the recipient). The first $400 will not be taxed . The next $1250 of unearned income will be taxed at her lower tax rate. Then the "kiddie tax" (the unearned income is taxed at the parent's marginal rate) will kick in. But you'll have the cost* and hassle of the 2nd tax return.
That's brings up the question: Why are you taking non-qualified distributions? There may be other options available, rather than paying tax and penalty.
Q. And, she doesn't have to file the tax return of $6000 summer wages?
A. That's correct, if she has no other income and does not need withholding refunded. Your state may have a lower filing requirement (most don't).
*If you buy the TurboTax download (instead of using TT online), you can do additional returns at no additional cost (but no free state e-file).
