Child's 1099-INT has Federal Income Tax withheld

[cang802]

Hi,

Due to a bank error, my daughter's custodial account has a small amount in the Federal Income tax withheld box (Box 4) on her 1099-INT. The interest is just $17.08 and that is the total income she has or the year. 

Under normal circumstances, I would be able to file for her, but my understanding was that the Tax Withheld box means that I'm not allowed to file for her. Does that mean I'll have to file a separate return for her although she just earned $17.08?

Thanks,

-calvin

[TxLass07]

There is a minimum income requirement for filing a tax return, which this interest does meet. I know years ago the minimum was about $9000/annual. However, NOT filing a return also would mean that the interest was not returned to her as a refund (since it was apparently sent as "taxes due" on an income-producing account*). Since you state that the situation is due to a bank error, perhaps you should speak with someone at the bank to see if they can handle the situation without your having to file a return. If they cannot do this, 1) the bank should reimburse you any costs for filing yourself - on behalf of your daughter, and 2) perhaps you should consider changing your bank. 🐵 (Our family has preferred using credit unions over banks for a number of years.) * This is doubly concerning since a bank or other financial institution generally does not withhold ANY taxes unless there is several hundred dollars in interest received on an account during a tax year.

[cang802]

@TxLass07 I appreciate the response. The issue stemmed from a signature card that they thought we had not signed and returned but in fact did. I called the bank and they said that because the mistake was only discovered in 2022, they are not able to correct the issue for any withholding that occurred in 2021. Not sure how true that is. I would have assumed that they could file an amended 1099.

In case others are looking at this post, a dependent child must file their own return if their unearned income (interest, dividends, etc.) exceeds $1,100. Source: https://turbotax.intuit.com/tax-tips/family/tax-filing-requirements-for-children/L8ice6z0K and others. 

[Mike9241 · Accepted solution]

if that's her total income, she does not have to file.  however, you will not be able to get back the withholding unless you file a return for her.