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No. Dependents who have unearned income, such as interest, dividends or capital gains, will generally have to file their own tax return if that income is more than $1,050 for 2017 (income levels are higher for dependents 65 or older or blind).
A parent can elect to claim the child's unearned income on the parent's return if certain criteria are met. If the dependent child's 2017 unearned income is less than $10,500, he made no estimated tax payments during the year, and he had no income tax withheld at the source, parents can generally elect to claim his investment income on their own return.
This election, using IRS Form 8814, simplifies the reporting of the income and makes it so that the child does not have to file a separate return; however, it can create more overall tax liability, depending on the parents' tax situation. A child may pay as low a tax rate at 0 percent, whereas the parents will likely be paying a higher rate.
On investment income over $2,100, however, children will be taxed at the parents' rate anyway, even if they file their own returns. Consider calculating the overall impact on taxes of each method before choosing. (TurboTax can help with this.)
No. Dependents who have unearned income, such as interest, dividends or capital gains, will generally have to file their own tax return if that income is more than $1,050 for 2017 (income levels are higher for dependents 65 or older or blind).
A parent can elect to claim the child's unearned income on the parent's return if certain criteria are met. If the dependent child's 2017 unearned income is less than $10,500, he made no estimated tax payments during the year, and he had no income tax withheld at the source, parents can generally elect to claim his investment income on their own return.
This election, using IRS Form 8814, simplifies the reporting of the income and makes it so that the child does not have to file a separate return; however, it can create more overall tax liability, depending on the parents' tax situation. A child may pay as low a tax rate at 0 percent, whereas the parents will likely be paying a higher rate.
On investment income over $2,100, however, children will be taxed at the parents' rate anyway, even if they file their own returns. Consider calculating the overall impact on taxes of each method before choosing. (TurboTax can help with this.)
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