Kiddie Tax and Process

[Elo-5000]

My son has unearned income of $1,125, does I need to file a return for him?     Should be a day if he has  unearned income exceeding $2000, what are my obligations?   Do i file a return under his social or report it under my return?  If I have to report it under my report, how do that using turbo tax  when i input my info under wages and income?

[DanaB27]

Yes, your son will need to file his own 2020 tax return if:

• Your earned income (money you made by working) exceeds $12,400
• Your unearned income (interest, dividends, capital gains, etc.) exceeds $1,100
• Your business or self-employment net income (gross minus expenses) is at least $400
• Your gross income (earned plus unearned) exceeds the larger of $1,100 or your earned income (up to $12,050) plus $350

Please make sure that his return is marked that he can be claimed as a dependent.

Please see What is the 2020 Kiddie Tax? and How do I report and pay the Kiddie Tax on my 2020 return? for when his unearned income exceeds $2,200.

[Elo-5000]

DanaB27

Thanks for responding to my inquiry.   Just to reconfirm that  we are on the same page.

1) Its my understanding if my son has unearned income of less than $2,200--a income tax filing is not required -correct?

2) When my son does have unearned income more than $2200, then he would need to file an income tax return -correct 

[DanaB27]

No, your son will have to file a tax return for 2020 because his unearned income was over $1,100, you stated it was $1,125.

But the Kiddie Tax won't apply until his unearned income exceeds $2,200.

[Elo-5000]

Thanks for the clarification.  Can you please tell what IRS publication I can reference that talks about this in greater detail?  Also, one last question.  What income level does a child have to file an income tax return rather it be through unearned or earned income and what IRS publication can I reference for this?

[DanaB27]

Please see IRS Pub 17 page 8 Table 1-2 for filing requirements for dependents:

• Your earned income (money you made by working) exceeds $12,400
• Your unearned income (interest, dividends, capital gains, etc.) exceeds $1,100
• Your business or self-employment net income (gross minus expenses) is at least $400
• Your gross income (earned plus unearned) exceeds the larger of $1,100 or your earned income (up to $12,050) plus $350

Please see IRS Topic No. 553 Tax on a Child's Investment and Other Unearned Income (Kiddie Tax) and  Publication 929, Tax Rules for Children and Dependents  for more information on the Kiddie tax.