child is a taxpayer in his/her own right. If the tax laws require the child to file
return but he/she is unable to file the tax return for any reason the parent or guardian is required to
file the tax return. If the child cannot sign the tax return the parent should sign the child's
name on the tax return followed by "by [parent's signature], parent for minor child".
If your child is under 19 and has gross income of more than
$950, consider electing to
include your child's tax liability on your tax return. This option is available if your
child's gross income is comprised only of interest and dividends totaling
$9,500 or less,
no estimated tax payments are made for the tax year, and the child is not subject to backup
tax withholding. Making this election requires including your child's gross income in excess
of $1,900 for the tax year on your tax return.
For each child for whom this
tax election is made, an added tax equal to the lesser of $75.00 or 10% of the excess of your child's income over
$950 is owed
on your tax return. Your child's
holdings are not depleted by paying tax, and the cost of preparing an additional
Including your child's investment income on your
tax return may allow you to deduct more
investment interest expense - up to $9,500 - because of the addition of your child's
investment income on your tax return. This could effectively shelter a portion of the child's income from
tax on your tax return.
But be careful. The additional income could reduce available itemized
tax deductions on your tax return that
are tax deductible based on a percentage of Adjusted Gross Income. Additionally, the election could increase
your state income tax liability on your state tax return.
If your child has only earned income and no investment income an
IRS tax return must be filed if
the child's income is more than $5,800.
There are special tax rules that affect the tax on certain
investment income of a child
under age 19.