Tax Tips 2004 - Kiddie Tax

While you begin to file your taxes this year, you might face the issue of filing a return for your child. Tax Attorney Donna LeValley is contributing editor for JK Lasser Your Income Taxes 2004. She says if your child had income from investments, you face a couple of choices:

Basically, if the child has investment income of over $750, which is the standard deduction they are entitled to, then you have to file a tax return for them. You have two choices. You can file it separately for them on form 8615 or include the income with yours on your tax return and include a form 8814.

LeValley says you want to run the numbers both ways to find out which method is best for your tax return. There's no accurate rule of thumbe to guide you here. For a child over age 14, Levalley says for investment income and part time wages, it is usually wise to file a separate tax return so they can take advantage of lower tax rates, standard deductions and other tax breaks.

Not meant to be a complete discussion of any tax subject. We are not responsible for any action taken based on this information, which is from reliable sources and believed to be accurate. See your tax advisor before taking any tax related actions.