For 2008, a child under 19 (or 24 if a full-time student) who meets all the following criteria, and who receives more than $1,800 in investment income, must pay tax (kiddie tax) on that income.

The child must:

• Be a full-time student
• Have at least one living parent
• Have not filed a joint tax return
• Not have had enough income to provide at least half of his or her own support

Investment income includes:

• Taxable interest
• Ordinary dividends
• Capital gains
• Rents and royalties
• Taxable Social Security benefits
• Pension and annuity income
• Income received as the beneficiary of a trust

In some cases, the parent can elect to claim the child's interest, ordinary dividends, and capital gain distributions on the parent's tax return. The parent can elect to claim the child's interest if the child:

• Is under 19, or 24 if a full-time student, at the end of the tax year
• Did not have any form of income other than investment income
• Gross income is less than $9,000
• Did not make any estimated tax payments
• Is not filing a married filing joint return

If your child qualifies to make the election, at least one of the following must be true to be able to claim the investment income:

• You are filing a joint return with the child's other parent.
• You and the child's other parent are married but filing separately and you have the higher taxable income.
• You were unmarried and treated as unmarried and the child lived with you most of the year.
• You were remarried and you and your new spouse are filing a joint return.
• You were remarried and you and your new spouse are filing separate returns and you have the higher taxable income.

To claim the child's income on your tax return, you must file Form 8814 with your tax return.

If you or the child does not qualify to claim the child's investment income on the your tax return, a tax return with Form 8615 must be filed for the child. You can also elect to file a return for the child even if the child and you qualify to claim the income on your tax return.

When filing a tax return for the child, the income will be taxed at your tax rate. If  your taxable income, filing status, or net income of other children is not known by the due date of the return, you can estimate the amounts or request an automatic six-month extension to file. If you choose to estimate the amount, you must  file an amended return when all of the information has been determined.