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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.
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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.

Bill
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