Revised IRS Tax Forms Include 1 for Children
WASHINGTON — The Internal Revenue Service on Wednesday unveiled a new series of revised tax forms required by the 1986 tax overhaul, including a full-page document to be filed by children under age 14 who have more than $1,000 of interest or dividends.
The aim of the new “kiddie” form is to prevent parents from avoiding taxes by putting investment property in their children’s names. Under the new law, income from such property will be taxed at the parent’s tax rate, if--as is almost always the case--it is higher than the rate that applies to the child.
“It’s a very complicated form because it is a complicated area” of tax law, said Arthur Altman, chairman of the IRS tax forms committee. “I can’t sit here and say it is an A-B-C computation . . . but we have broken it out as simply as we can.”
Altman estimated that 600,000 to 800,000 children will have to file the new document, Form 8615, along with their 1040 or 1040A tax form. Research indicates that most families who are affected by this provision already hire professional accountants or lawyers to prepare their tax returns.
$1 Billion Expected
Officials estimate the provision will bring in more than $1 billion in taxes over the next five years.
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