Message Font: Serif | Sans-Serif
No. of Recommendations: 6
I have a 6-year old daughter. She obviously has no wage income but earned $2 in interest and $2 in dividends. More importantly though, she had a decent sized capital loss. I tried to put her on my return with TurboTax but it was rejected because her income was too low. Just finished running everything through Taxcut FOR HER ONLY to see if, by chance, she could get any of that capital loss back. Nope. No refund owed her and no taxes owed the IRS (hey it was worth a shot). However, do I need to bother filing the return since her total earned incomed was NEGATIVE? This is the first time I've sold a stock in her account (thankfully) so I'm new to the tax preparation for minors thing. Help please???? Thanks.

Yes, you need to file a return for your daughter for two reasons. The first is that the IRS only sees the sales proceeds from the stock sale. If that number is large enough, the IRS will be looking for a return. They don't know that the transaction produced a loss until you file Schedule D. The second reason is that your daughter can carry the capital loss forward until such time as she has sufficient income or capital gains to use it against. The only way to establish the capital loss carryforward is to file the original return.

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.