Retirement tax questions

The child is responsible for reporting the income from the account on their own tax return.  If the child's income is solely from investments and less than $1,100, they are not required to file a tax return.

If the amount they have as income from investments exceeds $2,200 the income will be taxed at the parents tax rate.

The Kiddie Tax is the tax levied on the portion of the child's unearned income that exceeds $2,200. Children who only had earned income from a job or self-employment, don’t make enough money to be required to file, or are filing jointly with their spouses are exempt from the Kiddie Tax.

There are conditions where the parents can report the income on their tax return.

All these conditions must be met:

• Your child was under age 19 (24 if a full-time student) as of January 1, 2020;*
• Your child's income was solely from interest and dividends (including capital gains distributions and Alaska Permanent Fund dividends) and is less than $10,500;
• Your child is required to file (that is, their income exceeded $1,100);
• Your child is not filing a joint 2019 return;
• No 2019 estimated tax payments were made for your child (including 2018 overpayments applied to 2019 estimated tax)
• No federal taxes were withheld from your child's income; and
• You're either filing a joint return with your child's other parent or you're the parent who is qualified to include your child's income on your return (for example, you're the custodial parent or you and your spouse are filing separately and you have the higher taxable income).

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