Child's income - deciding how to report it

[hvyplt]

I would like to have Turbo Tax tell me the bottom line tax liability comparing two cases:  1.  If I report my son's unearned income; 2. He files and reports his unearned income.  I thought TurboTax would show me both cases so I can see if it is worth the pain of doing two separate returns.  

[Cynthiad66]

You can do that because TurboTax allows you to start a return for FREE.  Create an account for the child with his income only then you can manipulate your return for the other computation.  When you are done you can delete the unused return or continue to prepare it for Free if it meets the qualifications to file FREE.

Tax Filing Requirements for a Child

The Internal Revenue Service requires all taxpayers, regardless of age, to file a tax return and pay the appropriate income tax in any year their gross income exceeds certain levels. This requirement extends to the children you claim as dependents. However, unlike adult taxpayers, children have more flexibility in choosing how to comply.  See the link above for more details.

[hvyplt]

Thank you.

[LenaH]

It is important to note that your child may be subject to "kiddie tax". Usually, this means that your child would have more than $2,200 of investment or unearned income, which is then will be taxed at your tax rate. Please keep in mind that unearned income includes unemployment compensation. 

Form 8615, Tax for Certain Children Who Have Unearned Income, is required when a child meets all of the following conditions:

1. The child had more than $2,200 of unearned income.
2. The child is required to file a tax return.
3. The child either:
   1. Was under age 18 at the end of 2020,
   2. Was age 18 at the end of 2020 and didn’t have earned income that was more than half of the child's support, or
   3. Was a full-time student at least age 19 and under age 24 at the end of 2020 and didn’t have earned income that was more than half of the child's support.
4. At least one of the child's parents was alive at the end of 2020.
5. The child doesn’t file a joint return for 2020.

For more information, please see What is the 2020 Kiddie Tax?

@hvyplt