Tax Experts

Can Children Take a Standard Deduction if Required to File?

By Kevin McCormally, Editorial Director, Kiplinger.com

March 12, 2008

Q. My nine-year-old grandson received dividend income in 2007 of $937 ($895 qualified dividends). He is now required to file an income tax return. If he files Form 1040 EZ, does he receive a standard deduction? Or, is the whole $937 taxable income? -- Samuel E.

Kevin's Answer:

The basic 2007 standard deduction for someone who can be claimed as a dependent on someone else's return (like a child claimed on his parents' return) is $850.

That will protect most of your grandson's income. The remainder will be taxed at his low rate, because the kiddie tax (taxing a child's investment income at his or her parents' rate) doesn't kick in until investment income passes $1,700.

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