680 / Can parents elect to include a child's income on their own return?
Sometimes. Certain parents may elect to include their child's unearned income over $2,700 in 2026 on their own return, thus avoiding the necessity of the child filing a return. The election is available to parents whose child has gross income of more than $1,350 and less than $13,500 in 2026, all of which is from interest and dividends.1
The election is not available if there has been backup withholding under the child's Social Security number or if estimated tax payments have been made in the name and Social Security number of the child. If the election is made, any gross income of the child in excess of $2,700 in 2026 is included in the parent's gross income for the taxable year. (However, the inclusion of the child's income will increase the parent's adjusted gross income for purposes of certain other calculations, such as the 2 percent floor on miscellaneous itemized deductions (prior to 2018) and the limitation on medical expenses.)
Any interest that is an item of tax preference of the child (e.g., private activity bonds) will be treated as a tax preference of the parent. For each child to whom the election applies, there is also a tax of 10 percent of the lesser of $1,350 or the excess of the gross income of such child over $1,350. If the election is made, the child will be treated as having no gross income for the year.2 The threshold and ceiling amounts for the availability of this election, the amount used in computing the child's alternative minimum tax, and a threshold amount used in computing the amount of tax are indexed for inflation.