Child Inherited a Traditional IRA

[Shue17]

Daughter, who was under 18 YO received an Inherited Traditional IRA.  She received distributions of $2k.  Her total Unearned income was under $2200.  Do I need to complete a tax return in her name?

[jtax]

It appears that she does need to file, but I suggest you review IRS Publication 929. https://www.irs.gov/pub/irs-pdf/p929.pdf

Assuming that your daughters is your dependent, pub 929 page 3-4 says that if an dependent under 65 makes more than $1100 from unearned income, that dependent must file a tax return.

Page 9 talks about the circumstances in which the child doesn't need to file and the parents can report the unearned income on their return. But that only seems to apply to dividend and interest income not retirement plan income.

[Hal_Al · Accepted solution]

I assume she got a 1099-R for the distribution.  That is not eligible for the option to be reported on the parent's return.  She will have to file her own return since the distribution is more than $1100.

You do not report his/her income on your return*. If it has to be reported, at all, it goes on his own return. If your dependent child is under age 19 (or under 24 if a full time student), he or she must file a tax return for 2021 if he had any of the following:

1.          Total income (wages, salaries, taxable scholarship etc.) of more than $12,550 (2021).
2.          Unearned income (interest, dividends, capital gains, unemployment, taxable portion of 529 distribution, taxable IRA distributions) of more than $1100.
3.          Unearned income over $350 and gross income of more than $1100
4.          Household employee income (e.g. baby sitting, lawn mowing) over $2300 ($12,550 if under age 18)
5.          Other self employment income over $432, including money on a form 1099-NEC

*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. Enter at Less common income / Child's income.

[Shue17]

Thanks.  You are correct she did get a 1099R.  I appreciate the help.