Kids custodial accounts - filing taxes for carryforward loss and dividend options

[Tommyrock]

My kids each have a small custodial account.  They made about $70.00 in dividend and interest and lost about $150.00.  They each have a single composite1099 form from the brokerage company.  They have no earned income.  I understand that their income is below what we need to report to the government.  I understand that we can choose to report the loss for carry forward purposes.

Can I choose to report the capital losses for carryover purposes on their tax returns and omit the dividend/interest on their tax returns?

[DianeW777 · Accepted solution]

Yes, you can file to include the capital losses should there be a carryover. Also, you are correct in the respect they are not required to file. If there does happen to be a capital loss carryover you want to file to keep it current and on record for a year they might have income to use it up. For this reason you should file the tax returns for your kids small custodial accounts.

No, you cannot omit the dividend/interest income. All taxable income must be included in the tax return to accurately calculate the capital loss carryover.

[Tommyrock]

Thank you.