IRS Form 8814

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As you may know, the taxation system in the USA is overloaded with paperwork. Internal Revenue Service (IRS) obliges everyone who has some type of income to fill out different forms and returns. Even children of any age must file their reports if they have income. So, IRS Form 8814 is a way to avoid the completion of returns by children but trust this case to their parents.

IRS Form 8814 allows parents to include a passive income of their child into their tax return. It is difficult to force a child to fill out a huge form, isn’t it? That is why you may be interested in this form if your child has taxable income. Being a parent, you can fill all the fields of this form and attach it to your main return as a confirmation of numbers in the tax report. If you want to know more about IRS Form 8814, this article will help you to get detailed information about it and cope with the completion process successfully.

However, several circumstances should be matched to make it possible to add a child’s income into the return of parents:

  • A child earned only such types of income as interest and dividends.
  • A child received no more than $11,000 for the previous year.
  • He or she did not use joint return.
  • A child is required to fill out the return for the previous tax year.
  • A child has not received estimated tax payments during the last year.
  • He or she is not older than 19 years old (or 24 years old if a child is a full-degree student).
  • A child did not need to pay federal income tax.

Make sure your child meets all the aspects described above to elect to report his or her income.

Moreover, a parent who decided to report a child’s income in personal return should meet one of the criteria below:

  • You have separate returns with another parent of a child, and your taxable income is higher.
  • You and your spouse (parent of a child) completed a joint tax return.
  • You were not married, you had a divorce with the parent of your child, and he or she has lived with you for the major part of the taxable year.
  • You are remarried, and you are a custodial parent. You can fill a joint return with your new partner or a separate return if you have a higher taxable income.

Disadvantages of Having IRS Form 8814

This form makes it easier to control all the financial procedures inside the family, but if you elect to report the child’s income in your return, some tax deduction will not be applied to it.

For example, qualified dividends earned by a child have a 0% tax rate if he or she confirms them in a personal report. If you decided to fill out IRS Form 8814, you might pay a 10% tax rate for such an income.

Also, there is a special deduction that equals $1,650 for blind children, but you will not be able to get it if the income is reported in the parental return.

Besides, there are special deductions if the child made some contributions from the income. It is also a unique opportunity to reduce taxation amounts that are not accessible for adults.

That is why you should estimate the amount of taxes your child should pay for both cases filing forms by a child and by a parent. It will help you to avoid overpayments and apply tax deductions to income.

Special Requirements

Two factors can influence the process of filing Form 8814:

  • Having foreign account
  • Change of address

So, if your child has passive income from foreign trusts, you should clarify it in Schedule B of Form 1040. Also, you probably will be required to fill out Form 8938. You can get more information about the latter form in its instructions or on our website.

If your child has changed their residential address since the last return, you should complete Form 8822 and send it to the IRS to inform them. If you do not do this, your returns will not be accepted in time.

How To Fill Out IRS Form 8814

As a parent, you should fill out IRS Form 8814 and attach it to your tax return on proper dates. If you have more than one child and want to report the income of two or more children, you should fill out separate papers for each child.

Here we will describe the step-by-step procedure of filling out IRS Form 8814. If you have any misunderstandings about some lines, you can use our software that will fill in everything for you.

Introduce yourself and your child

You need to enter your full name and social security number on the top of the form. If you have joint returns, you should write in the name of both parents but identify SSN only for one parent. It should be the SSN of the person whose SSN is the first in the tax return. Repeat the same actions for your child. If you are going to complete more than one Form 8814, put the checkmark in the box near field C.

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Describe child’s interest

Use lines 1a and 1b to clarify the amount your child earned from interests. Do not include nontaxable income in line 1a — enter it in line 1b.

If a child earned something as a nominee, you should write “ND” in line 1a near to the amount of income.

If the income consists of acquired interests, ABP (amortizable bond premium” or OID (original issue discount), highlight it on the dotted lines in 1a.

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Provide data about dividends

Include the amount your child earned from dividends in line 2a. If dividends were received as a nominee distribution, write “ND” in line 2a.

Also, fill line 2b with the amount your child got from qualified dividends.

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Enter the capital gain distribution

Put the amount your child received from capital gain distribution in line 3. In the case with a nominee distribution, follow the similar to previous boxes procedure.

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Summarize income

Calculate the sum of values in lines 1a, 2a, and 3 and fill it in line 4. Make sure the number is not greater than $11,000 because if it is the case, children should have their tax return. Also, pay attention to the amount because if it is equal to or less than $2,200, you can move further to line 13, skipping lines 5-12.

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Make several computations

Firstly, you need to clarify whether you need to complete lines 5-12 or not based on the explanation above.

Secondly, you should write in 2,200 in line 5 — it is a base amount.

Then, you need to subtract the value in line 5 from line 4 and put the result in line 6.

After that, you should complete lines 7-10 only if you have empty boxes in lines 2b and 3.

If you need to fill out these lines, you should follow these steps:

  • Divide value in line 2b by line 4 and put the rounded to three digits result in line 7.
  • Divide the number in line 3 by line 4 and enter rounded to three digits result in line 8.
  • Multiply results of lines 6 and 7 and enter the number in line 9.
  • Multiply numbers in lines 6 and 8 and put the result in line 10.

If you have completed lines 7-10 you should put the sum of lines 9 and 10 in line 11. If not, you should enter zero here.

To fill out the final line in this part you must subtract the value of line 11 from the value of line 6 and enter the result in line 12. When you are filing several forms 8814, you need to enter numbers from the 12th line of every paper in Form 1040.

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Identify taxation amount for the first $2,200 of child’s income

Put value 1,100 in line 13 — it is an untaxable part of income.

After that, subtract the value in line 13 from the value in line 4 and enter it in line 14. If it is equal to zero or negative, put zero here.

If the result in line 14 is less than $1,100, you should put 110 in line 15. It means that the final taxation amount for this part will be equal to $110.

If line 14 is greater than $1,100, you should multiple it by 0.10 and put the result in line 15.

Read the note below carefully, and do not forget to fill the final amount in your Form 1040, line 16. If you complete forms for more than one child, you should summarize amounts in line 15 from all forms and put the sum in line 16 of Form 1040.

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When you have finished filling out this form, you should check the correctness of all the given information, copy some values into your tax return, and attach file Form 8814 with your main tax return.