Form 8814 - Parents Election To Report Child Interest And Dividends

Form 8814 lets you include your child's income on your tax return, which can potentially lower your overall tax bill. Instead of your child filing their own tax return, their income is reported on yours, which might result in a lower tax burden since your tax rates are usually lower.

When to Use Form 8814

You can use Form 8814 if:

• Your child was under 19 (or under 24 if a full-time student) at the end of the tax year.
• Your child's only income was from interest and dividends, including capital gain distributions.
• Your child's gross income was less than $12,500 for the year.
• No estimated tax payments were made under your child's Social Security Number.
• No federal income tax was withheld from your child's income under backup withholding.

Purpose and Benefits

The purpose of Form 8814 is to make tax filing easier. By using this form, you avoid filing a separate tax return for your child's income, which simplifies your finances. Additionally, this election might lower your overall tax liability since your child's income is taxed at your rate, which could be lower than what it would be if they filed separately.