J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

24.3 Computing “Kiddie Tax” on Child’s Return

If your child is subject to the “kiddie tax” (24.2) for 2012, your child’s regular income tax liability is computed on Form 8615, which is attached to his or her return, unless you make the parent’s election to report the child’s dividends and interest income on your own return (24.4). Before your child’s Form 8615 can be completed, your own taxable income and regular income tax must be determined. When you make the computation on Form 8615 for your child, you add your taxable income to your child’s net investment income in excess of $1,900. You figure the tax on the combined amount based on your filing status, using the Qualified Dividends and Capital Gain Tax Worksheet (or, if applicable, the Schedule D Tax Worksheet) if the combined amount includes net capital gain or qualified dividends (5.3). The excess of the resulting tax over your own separately figured tax liability is generally the kiddie tax on the child’s investment income exceeding $1,900. That tax, plus the tax on the portion of the child’s taxable income not subject to the kiddie tax, is reported as the child’s regular tax liability on his or her Form 1040 or 1040A.

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Planning Reminder

Prepare Your Return First

Before your child can complete Form 8615, or you prepare it for the child, your own taxable income and regular income tax liability must be ...