1. Investment Income. Investment
income generally includes interest, dividends and capital gains. It also
includes other unearned income, such as from a trust.
2. Parent’s Tax Rate. If your
child's total investment income is more than $2,100 then your tax rate may apply
to part of that income instead of your child's tax rate. See the instructions
for Form
8615, Tax for Certain Children Who Have Unearned Income.
3. Parent’s Return. You may be
able to include your child’s investment income on your tax return if it was less
than $10,500 for the year. If you make this choice, then your child will not
have to file his or her own return. See Form
8814, Parents' Election to Report Child's Interest and Dividends, for
more.
4. Child’s Return. If your
child’s investment income was $10,500 or more in 2015 then the child must file
their own return. File Form
8615 with the child’s federal tax return.
5. Net Investment Income Tax.
Your child may be subject to the Net
Investment Income Tax if they must file Form 8615. Use Form
8960, Net Investment Income Tax, to figure this tax.
Refer to IRS Publication 929, Tax Rules for Children and Dependents. You can get related forms and publications on IRS.gov.
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