Form 8814 – Parental Reporting of Child's Interest and Dividends

A child's income from taxable financial sources can be added to a parent’s tax return. The amount of total taxable interest, dividends, and capital gains must be less than $11,000 annually. If it exceed that amount, the child must fill out their own tax return.

There are certain criteria for the parents’ tax elections to be allowed. See the form attached for details.

This income is added into the Federal Section of Form 1040.

To get started:

•   Select Other Taxes.
•   Go to the Child's Interest and Dividend Earnings sections.
•   Enter or select the child’s name. It will be in the Select an Eligible Child options in the menu.
•   Enter the financial earnings of the child.

Lucky for you, a certain amount is tax-free. $1,100 is not taxable. This affects parent's tax return by either:

1. Child income Taxes- Tax on the unearned income over $1,100 through $2,200 is at a rate of 10%. Add the tax to the parent's taxes in the form.
2. Additional Income is added to the Parent - Over $2,200, the amount is considered as Other Income on Schedule 1. The parent’s taxes will be notated Form 8814.

For more information, read Publication 929 from the IRS here.

Reminder: Form 8814 is only for one individual child. Multiple children need to be entered in their parent’s form.