Parents' Election To Report Child's Interest and Dividends - Form 8814

Parents can elect to include a child’s income on the parent’s return (Form 8814) when a child’s only income is interest, dividends or capital gain distributions. If making this election, the child does not have to file a return. The child must meet the following conditions to qualify:

• At the end of the year, must be younger than age 19 or a full-time student younger than age 24
• Must have gross income of less than $10,500
• Must be required to file a return unless the election is made
• Must not file a joint return for the year
• Must not have made estimated tax payments for the tax year, and no overpayment from the previous year can apply to the tax year under his name and Social Security number
• Must not have any federal income tax taken out of his income under the backup withholding rules

If you elect to report your child’s income on your return, you cannot take certain deductions that your child could take on his or her own return such as:
• Additional standard deduction of $1,550 if the child is blind, 
• Penalty on early withdrawal of child’s savings, and
• Itemized deductions such as the child’s investment expenses or charitable contributions. 

If your child received qualified dividends or capital gain distributions, you may pay up to $105 more tax if you make this election instead of filing a separate tax return for the child. This is because the tax rate on the child’s income between $1,050 and $2,100 is 10% if you make this election. However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions.

Form 8814

Use Form 4868 to File Tax Extension

A taxpayer may request an automatic six-month extension by filing Form 4868 (via paper or electronically) by the due date of the return or by paying all or part of the income tax due using a credit or debit card. For most taxpayers, this extends the due date until October 15.

Please note that this is NOT an extension of time to pay taxes. The taxpayer must estimate the taxes due and can submit the payment with the extension request.

There are three ways to request an automatic extension of time to file a U.S. individual income tax return.
1. You can pay all or part of your estimated income tax due and indicate that the payment is for an extension using Direct Pay, the Electronic Federal Tax Payment System, or using a credit or debit card. See How To Make a Payment, on page 3.
2. You can file Form 4868 electronically by accessing IRS e-file using your home computer or by using a tax professional who uses e-file.
3. You can file a paper Form 4868 and enclose payment of your estimate of tax due. 

Late Payment Penalty
The late payment penalty is usually 1⁄2 of 1% of any tax (other than estimated tax) not paid by April 18, 2016. It is charged for each month or part of a month the tax is unpaid. The maximum penalty is 25%.
The late payment penalty will not be charged if you can show reasonable cause for not paying on time. Attach a statement to your return fully explaining the reason. Do not attach the statement to Form 4868.
You are considered to have reasonable cause for the period covered by this automatic extension if at least 90% of your actual 2015 tax liability is paid before the regular due date of your return through withholding, estimated tax payments, or payments made on Form 4868. 

Late Filing Penalty
A late filing penalty is usually charged if your return is filed after the due date (including extensions). The penalty is usually 5% of the amount due for each month or part of a month your return is late. The maximum penalty is 25%. If your return is more than 60 days late, the minimum penalty is $135 (adjusted for inflation) or the balance of the tax due on your return, whichever is smaller. You might not owe the penalty if you have a reasonable explanation for filing late. Attach a statement to your return fully explaining your reason for filing late. Do not attach the statement to Form 4868. 

Form 4868