I'm curious (ok, honestly, confused) about the need to file a return for a minor child...
Assuming interest income of $100, dividend income of $400 and a capital gain of $200 we have gross income of $700 which is below the minimum filing threshold of $850 as well as there being no earned income.
The capital gain is the result of one stock trade reported on a 1099B showing gross proceeds of $1000. The cost basis of this stock is $800 hence the gain included in gross income of $200.
The IRS sees a 1099-INT for $100, a 1099-DIV for $400 and a 1099-B for $1,000.
My inclination is to prepare and recommend the filing of the return showing "zero" on line 3 of the Form 8615. My client's inclination about filing consists of words not appropriate for this forum. Any thoughts?
Kiddie Tax, Return or not?
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Joe Dirt
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Red Cedar PM
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I would file a return for the kid. Even though it isn't entirely necessary, that should help you avoid the possibility of a notice which is bad for everyone involved in most cases. Additionally, since the return sounds pretty cut and dry (looks like about 4 numbers to enter in other than the basic information) it will probably take you more time to figure out whether it's really necessary to file than it would just to file the damn thing AND avoid the possibility of a notice.