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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10153
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have several custodial accts that I have set up for

Customer Question

I have several custodial accts that I have set up for grandchildren. What form do I use to report their income?
Submitted: 2 months ago.
Category: Tax
Expert:  Lane replied 2 months ago.

Hi. ... My name's Lane ... I can help here

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The child would not have to file if the amount of dividends was less than $1,050, and that was his only income... there's a 1050 exemption on unearned income for minors... and then if the income is more than that, you'll report on a tax return for them, and THAT income is taxed at the Child's rate.

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Only if the child's income is more than $2,100, the amount OVER that is subject to tax at the parent's tax rate instead of the child's tax rate.

Expert:  Lane replied 2 months ago.

Finally, if the child's only income is interest and dividend income (including capital gain distributions) and totals less than $10,500, the child's parent may be able to elect to include that income on the parent's return rather than file a return for the child. See Form 8814 (PDF), Parents’ Election To Report Child's Interest and Dividends.

Expert:  Lane replied 2 months ago.

TO recap:

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The following two rules may affect the tax and reporting of the unearned income of certain children:

  1. If the child's interest, dividends, and other unearned income total more than $2,100, part of that income may be subject to tax at the parent's tax rate instead of the child's tax rate. See the Form 8615 Instructions (PDF), Tax for Certain Children Who Have Unearned Income, or
  2. If the child's only income is interest and dividend income (including capital gain distributions) and totals less than $10,500, the child's parent may be able to elect to include that income on the parent's return rather than file a return for the child. See Form 8814 (PDF), Parents’ Election To Report Child's Interest and Dividends.

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Please let me know if you have any questions at all.

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And if you DON'T have other questions Your positive rating … (by using those the stars or faces on your screen, and then clicking “submit”) …would be appreciated!

Otherwise I receive no compensation for the work.

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Thank you,

Lane

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