Form 8814 - All in One Guide 2024 | US Expat Tax Service (2024)

If you are a parent who has a child with investment income, you may need to file Form 8814, Parent's Election to Report Child's Interest and Dividends.

This form is used to report the child's investment income on the parent's tax return, rather than on a separate tax return for the child.

In this article, we will provide an overview of Form 8814, including who can file it, when it should be filed, and how to fill it out.

What is Form 8814?

Form 8814 is a tax form used to report a child's investment income on a parent's tax return. When a child has investment income above a certain threshold, they are required to file their own tax return.

This threshold amount changes each year and is set by the Internal Revenue Service (IRS).

For tax year 2023, the threshold amount was increased to $2,500. This means that if a child has investment income greater than or equal to $2,500, they will be required to file their own tax return.

However, parents have the option to include the child's investment income on their own tax return by filing Form 8814.

This is a convenient option for parents, as it allows them to report their child's income on the same tax return as their own, simplifying the filing process.

Who can elect to file Form 8814 and when?

Parents can elect to file Form 8814 if all of the following conditions are met:

• The child is under 19 years old, or under 24 years old if a full-time student. If the child is over the age limit, they must file their own tax return and report their investment income separately.
• The child's only income for the tax year is from interest and dividends, and the total amount of that income is less than $11,000.
  If the child has other types of income, such as wages from a job, they cannot use Form 8814 and must file their own tax return.
• The child does not file a joint return for the tax year. If the child is married and filing a joint return with their spouse, they cannot be claimed as a dependent on the parent's tax return.
• The child is claimed as a dependent on the parent's tax return. The child must meet the requirements to be considered a dependent, including living with the parent for more than half of the year and not providing more than half of their own financial support.

Form 8814 must be filed along with the parent's tax return and must be submitted by the tax filing deadline, which is usually April 15th of the following year.

NOTE! Even if the child's investment income is below the threshold amount, it still needs to be reported on the parent's tax return. This can be done on Schedule B of Form 1040.

What info is included on the Form 8814?

Form 8814 requires the following information:

• The child's name and Social Security number: This information is used to identify the child and ensure that the correct child's income is being reported.
• The parent's name and Social Security number: This information is used to identify the parent who is reporting the child's income and ensure that the income is being reported on the correct tax return.
• The child's total investment income for the tax year: This includes all interest and dividend income that the child received during the tax year. The total investment income amount is used to determine if the child is eligible to be reported on the parent's tax return.
• The portion of the child's investment income that is being reported on the parent's tax return: This is the amount of the child's investment income that the parent is choosing to report on their tax return.
  This amount cannot exceed the child's total investment income.
• The child's tax rate for the tax year: This is the tax rate that would have applied to the child's investment income if they had filed a separate tax return.
  The tax rate is used to calculate the amount of tax that the child would have owed if they had filed separately. This amount is then subtracted from the tax owed on the parent's tax return.

How to file Form 8814 (instructions)

To file Form 8814, follow these steps:

1. Download and print a copy of Form 8814. The form can be found here below or - on the IRS website in the Forms and Publications section.
2. Fill out the form with the required information, including the child's name, Social Security number, and investment income. Make sure that all the information is accurate and up to date.
3. Calculate the portion of the child's investment income that will be reported on the parent's tax return. This is the amount that the parent is choosing to report on their tax return, and it cannot exceed the child's total investment income.
4. Calculate the child's tax rate for the tax year, using the tax tables provided by the IRS. This is the tax rate that would have applied to the child's investment income if they had filed a separate tax return.
5. Include the Form 8814 with the parent's tax return when it is filed. The completed Form 8814 must be attached to the parent's tax return, along with any other required forms and schedules.

NB!Form 8814 must be filed by the tax filing deadline, which is usually April 15th of the following year.

Form 8814 preview

To sum up

In conclusion, Form 8814 is a useful tool for parents with children who have investment income.

By electing to include the child's investment income on their own tax return, parents can simplify their tax filing process and potentially reduce the overall tax liability for the family.

NB!Doublecheck and ensure that all eligibility criteria are met and that the form is filed correctly to avoid any potential penalties or fees.