Does a 14 year old child have to file a federal income tax return if earning passive income from a UMTA?
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Comments
Absolutely.
The income is reported to the IRS under their SSN.
If the amount is (or appears to be) more than $900 (no other income), they have a filing requirement. If they also have wages, as little as $300 can cause a filing requirement.
If the unearned income is more than $1800, the part that is over $1800 is taxed at their parent’s tax rate.
And check state requirements. If in PA, and income is $35, the child MUST file.
Helen, EA in PA
Yes, if the income exceeds the filing requirements.
In case of interest income and dividend, the parents can elect to include the child’s income in (with) their own return.
The child return must be filed when the unearned income (interest, dividends, capital gains) is more than $900 for 2008. Either a separate return can be file or Parents can elect to include it in their own return if the income is between $900 to $9,000 in 2008. Parent can choose to include the child’s interest and dividends on the parent’s return if certain requirements are met. Use Form 8814, Parents’ Election To Report Child’s Interest and Dividends, for this purpose. Or else a separate return for the child can be filed. If child’s investment income is less than $1,800 for 2008), it will be taxed at child’s tax rate. If the Investment income is more than $1800 it will be taxed at Parent’s tax rate, and Form 8615, Tax for Children Under Age 18 Who Have Investment Income of More Than $1,800, must be completed and attached to the child’s tax return.
I assume this is the only income for the child, and that this is interest income.
If your child earns more than $900 interest income and is not blind, he is required to file a tax return unless the parents elect to include the child’s interest income on the parents’ tax return. If this election is made, the child does not have to file a tax return.
It is the parents responsibility either to prepare the return for the child or elect to include the interest income of the child on the parents’ tax return.