Kiddie Tax

[MomBob]

Client has two dependents that have investment interest and dividends. Stocks were sold to reinvest in a different fund. Form 1099-B was issued on the sale. There was a very small gain on the sale, but did not put the total investment income for the dependent over $1700, which would trigger a tax return for the dependent. Should a return be filed for the dependent?

[ChEAr$]

Huh?

Client has two dependents that have investment interest and dividends. Stocks were sold to reinvest in a different fund. Form 1099-B was issued on the sale. There was a very small gain on the sale, but did not put the total investment income for the dependent over $1700, which would trigger a tax return for the dependent. Should a return be filed for the dependent?

Clarify please. You say two dependents "that" have....(actually you mean "who" have. but.)

Did each have investment income? or just one?

For either one, or both,I a return needs to be filed if over investment income exceeds
$ 850 I think it is. (or 900 this year?)

[S T]

Capital Gains

I believe if there is capital gains from sale of stock under the "kids" name and social security #, then they have to complete and file their own tax return. And then depends from there whether or not the 8615 form needs to be filed.

If the capital gain is only from capital gain distributions from investments, then the 8814 can be filed.

See TB Section 12-9 and also Pub 929 and instructions for both 8814 and 8615 forms.

These rules are always so confusing for me!

Sandy

[MomBob]

Thanks Sandy, I find these confusing also.

[JCH]

I'm not clear on the 1099-B and to whom it was issued. If it was issued under the dependent's SS#, and it's over $850, then you defintely should file a return for the dependent.