Investment Income of Your Minor Child

If a child that you can claim as a dependent in 2005 had: (a) unearned income (e.g. interest, dividends, investments) over $800, (b) earned income over $5,000 or (c) gross income that was the greater of $800 or earned income up to $4,750 plus $250; he or she must report this income on a tax return of some sort.

• Reporting on the child's own return — if the child had income of $8,000 or more, he or she must file an individual tax return on Form 1040-EZ, 1040A or 1040, regardless of age. If an under-14-year-old reports income on his or her own individual tax return, he or she may have to attach Form 8615 and pay the "kiddie tax."
• Reporting a child's income on your return However, if the child was under 14 at all times during 2005 (that is, the child did not turn 14 until January 1, 2005, or later), and the child's income was less than $8,000, you may be able to elect to report the child's income on your own tax return.