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cactuswren
Level 1

Taxes on dependent minor child joint account interest income

My minor child is listed as primary owner on their savings account. I am joint owner. The 1099-int lists the child's name.

 

I am the main source of funds for the bank account - I make monthly transfers to child's account.

 

It is not a custodial account.

 

How do I treat this for tax purposes? Do I include child's interest income into my own? Ignore it? Other?

3 Replies
ColeenD3
Expert Alumni

Taxes on dependent minor child joint account interest income

You have a choice. If your child is required to file, you can file for them or because this is a special case, include the interest on your return.

 

The rules are different when your child receives income from sources other than employment, such as interest and dividend payments. When the 2020 total of this type of income exceeds $1,100, then a return must be filed for your child.

If your child’s unearned income only consists of interest and dividends, then you can elect to include it on your own return and combine it with your income. Do this by completing IRS Form 8814 and attaching it to your personal tax return (TurboTax will do this for you).

 

However, depending on the level of your income, making this election may result in higher income tax than if you prepare a separate return for your child. This is because it could push you into a higher tax bracket, where higher tax rates may apply. If you decide to prepare a separate return for your child, the same reduced standard deduction rules detailed above will apply.

 

 

cactuswren
Level 1

Taxes on dependent minor child joint account interest income

The child's interest income is less than $1100. I wasn't sure if I needed to include the interest in my income since I primarily fund the account and I am joint owner.

JoannaB2
Expert Alumni

Taxes on dependent minor child joint account interest income

It depends. If your child has no other income, you may not include his /her unearned income such as interests and dividends on your 2020 income tax return. Otherwise, you may elect to file Form 8814, Parent's Election to Report Child's Interest and Dividends and attach it to your income tax 1040, if your child is subject to kiddie tax:

  1. Under age 19 or full-time student ages 19-23.
  2.  Child's only income was from interests and dividends.
  3. Child's gross income was less than $11,000.
  4. There was no federal income tax withheld from the child's income.
  5. Child's unearned income was less $2,200.

See, tax on child's investment (kiddie tax), for more information.

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