Minor with 1099R, Where Taxed?

[ToledoEd]

Have a client whose spouse died during the year. They have an eleven year old child who inherited part of parents 401k, inexcess of $5000. The 1099R shows distribution code 4 in box 7.

My question is this, we have done a tax return for the child, but I am getting a Drake Error code stating that a minor wth more than $1900 investment income needs to show income on form 8615 for living parent. Is a 1099R Investment Income? Where on the Form 8615 would it go?

Drake is looking into this for me also but I have never had this situation before, so I am looking for ideas. Thanks in advance.

Ed

[Koss]

Form 8615

The following text is from the instructions for Form 8615:

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For Form 8615, “investment income” includes all taxable income other than earned income as defined later. Investment income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, etc. It also includes taxable social security benefits, pension and annuity income, and income (other than earned income) received as the beneficiary of a trust (emphasis added).
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BMK

[FEDUKE404]

Answer

Learn something EVERY day!

Read the definition of "Investment Income" for Form 8615, page one ( http://www.irs.gov/pub/irs-pdf/i8615.pdf )

No need to bother Drake.

FE

[JoshinNC]

I have one of these

Kids dad was killed while on active duty in Iraq (traffic accident, not combat), so she gets survivor benefit. You will need the child's surviving parent to complete her return so you can add those items to the child's return in Drake in order to calculate the "kiddie tax" for the child.

[ToledoEd]

Long day yesterday, missed the line with the pension income in the instructions. Thanks for the help.
Ed

[taxea]

Wouldn't the 5K be an inheritance not subject to tax other than the interest earned, from some point? Isn't the kiddie tax form an option rather than required? Does a separate return benefit the child more?

[Lion]

It's only an option to report interest and dividends on parents' return IF that's the only income of the child. This child has Form 1099-R and must file their own return with kiddy tax. Kiddy tax is not an option, it's the law.

[taxea]

It's only an option to report interest and dividends on parents' return IF that's the only income of the child. This child has Form 1099-R and must file their own return with kiddy tax. Kiddy tax is not an option, it's the law.

Thanks...I haven't had to do one in ages, couldn't remember whether or not it was optional.