When does my child need to file a tax return to report investment income?
If your child had investment income for 2016 and your child’s unearned income (i.e., taxable interest, dividends, capital gains) was more than $1,050, a return must be filed.
However, you may elect to report your child’s unearned income on your return. You and your child must meet certain conditions to qualify for this election. See IRS Publication 929—Tax Rules for Children and Dependents—for more information.
What if my child’s dividends and capital gains were less than $1,050 for 2016?
Generally your child will not owe taxes for 2016 on unearned income of less than $1,050 and will not need to file a tax return if he or she was a single dependent.
However, if your child also had earned income, such as wages, tips, taxable scholarships and grants, it may be necessary to file a 2016 tax return if:
- That income was more than $6,300; or
- Child’s total income (earned plus unearned) was more than the larger of: – $1,050; or – Earned income (up to $5,950) plus $350.