Q. If the child only has interest income and it's more than $2,500., do I report that income on my tax return or my child's tax return and use my marginal tax rate? What about between $1,250. and $2,500.
A. It's optional in both cases, up to $12,500 of income.
If his only income is from interest and dividends, Alaska PFD or capital gains distributions shown on a 1099-DIV, there is a provision for entering it on your return, using form 8814. In TT, enter at Less common income / Child's income.
Back to your original question; what is the purpose of the joint account and who's money is it really? If you have control, your original statement ("I understand that the interest earned on their accounts has to be included on my income tax return") is correct and this will not change as the children get older.
