When Children Receive Investment Income

Some children receive incomes from investments, which may include interest payments, dividends, capital gains, and unearned income from a trust. This income may be subject to special tax rules. If you don’t know how to treat your child’s investment income, consider the following tips:

  • If the total investment income that your child earns exceeds $2,000, part of this income may be subject to your own tax rate rather than that of your child. You can learn more by reading Form 8615 on the IRS website.
  • If your child’s investment income for the year was less than $10,000, you may be albe to include this income on your own tax return so that he or she will not be required to file a separate return. See Form 8814 for more.
  • Should your child’s investment income reach or exceed $10,000, he or she must file his or her own return. For this purpose, you will need Form 8615. Note that, when filing this form, your child may be subject to the Net Investment Income Tax.

If you or your child require any further assistance with tax filing or other financial concerns, please contact Seattle CPA Alisa Na during normal business hours.