Accepted Answer

Hello again jeep man,

Yes, you will need to file a 2007 return for your daughter to report any 1099 income that was reported under her name from the UGMA account.

You have talked about how typically people who make very little do not owe any tax for the year. As a general rule, taxpayers who earn less than the standard deduction amount allowed for the year and their personal exemption allowance would not owe tax and would not need to file a return. So a single person who had income of less than $9,350 in 2009 would not need to file a return and would not owe any tax. However, this same rule does not apply to minor children who have income from investments. For a child that can be claimed as a dependent on their parent's return, that child must file a return if they have investment income of $900 or more for the year.

When your daughter files a return, if she had investment income of more than $1,700 for the 2007 tax year, then you would use Form 8615 to compute the actual amount of her tax due rather than using the standard tax tables. When you fill out this form, that is where your income will come in to play and your tax rate will end up being used for part of her earnings.

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Thank you jeep man.

Expert:	Merlo
Pos. Feedback:	99.8 %
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Answered:	7/25/2009

Accountant

25+ years tax consulting. Specializing in returns for US citizens living abroad