@mitchden1 wrote:
I'm a little confused. 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.
You are never required to report the child's income on the parent's tax return. You have the option to do that if a number of conditions are met. You can always file a separate tax return for the child.
Paying tax on part of the child's income at the parent's tax rate ("kiddie tax") has nothing to do with whether the child's income is reported on the parent's tax return or a separate tax return. The rules for kiddie tax are the same no matter whose tax return the child's income is reported on.
The conditions to allow the child's income to be reported on the parent's tax return, and the conditions for applying kiddie tax, are completely different. Neither one affects the other.
