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Peter: I'm having a hard time thinking of any situations where it makes sense for the parent to report the income other than problems with low income - lots of deductions that are being wasted dragging taxable income below zero. Although a mutual fund with lots of cap gain distributions and a parent with a big cap loss carryover might apply at any income level.
If the kid's below 14 you're dealing with the kiddie tax (tax at the parent's rate)anyway, except for the standard deduction of $700 and lower tax on the next $700. So it doesn't even matter if it's interest or dividends - the parent's rate will apply on the excess.

Plus we'll charge for doing the kid's return. That makes it simpler for some parents, and saves us time.

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