For including your child’s income in your return, there are certain restrictions. Those include the child’s age and educational status, the sources of the child’s income and your marital status.
First, you have to answer the question: Is your child required to file a tax return?
For that, you have to look at
THE CHILD’S AGE:
If the child is a full-time student, the child should be under 24 years.
If your child is not a full-time student, he or she should be under 19 years of age.
SOURCE OF THE CHILD’S INCOME:
The child’s income should include only
-Alaska Permanent Fund
-capital gains distributions
CHILD’S TOTAL INCOME:
Child’s total income should be less than $9500.
CHILD’S FILING STATUS:
The child should not be filing another joint return.
CHILD’S ESTIMATED TAX PAYMENT:
The child should not have made any estimated tax payments for the year in question.
OVERPAID TAX IN PREVIOUS YEAR:
The child should not have any overpayment of tax in a previous year which was applied to this year’s estimated tax payments.
For example, during 2011 tax season, you are filing the 2010 tax return.
But your child should not have previously made any overpayment of tax in the year 2009 and which was later applied to Estimated Tax payments in 2010.
BACK UP WITHHOLDING OF TAXES:
The child should not have any income tax already withheld under the Backup Withholding Rules.
ARE YOU THE ELIGIBLE PARENT TO INCLUDE THE CHILD’S INCOME IN THE RETURN?
You should be the parent who is eligible to include the child in your return.
This is straightforward when both parents remain married and are filing a joint return.
Things become complicated when parents file separately. Then parent with the greater taxable income should include the child’s income in the return
A custodial single parent gets the privilege to include the child’s income.
For tax purposes, the status of being married, separated or divorced needs the sanction of a legally authorized or judicial process; you cannot just say you are.
Remember, all these apply only if you elect to include the child’s income in your return.
HOW TO FILE:
If all the above conditions are not fulfilled, you cannot include your child’s income in your return and the child is required to file a separate return.
If you meet these conditions, then you can complete and attach Form 8814 to your 1040 return and the child need not file a separate return.
Important: You cannot use return forms 1040 A or 1040 EZ, if you use this election and attach Form 8814.
Remember, there can be disadvantages as well as advantages in including your child’s income in your return.
PLEASE NOTE: This article is for informative purposes, dealing only with some of the basics of including a child’s income in a parent’s tax return. It does not cover all the aspects of the subject. For the latest and detailed information, always consult the resources provided by the Internal Revenue Service (IRS).