Tax Type
Individual Income Tax
Description
Unearned Income of Minor Children:"Kiddie Tax" Election on Federal Form 8814
Topic
Computation of Tax
Date Issued
12-01-1992
Unearned Income of Minor Children:
"Kiddie Tax" Election on Federal Form 8814
The Department of Taxation has received questions recently regarding the application of Virginia's individual income tax to parents who elect on federal Form 8814 to include the unearned income of children under age 14 with their own for purposes of computing the federal income tax.
This bulletin is being issued to restate existing department policy on this issue and to amend the filing instructions for taxable year 1992 accordingly.
The department's long-standing policy has been that the Virginia taxable income of a parent making the federal election includes that portion of federal adjusted gross income (FAGI) representing the income of a child. This is because of the statutory requirement in Va. Code §58.1-322 that the Virginia taxable income of an individual taxpayer equal that individual's FAGI for the year.
As such, the parent may not subtract that portion of FAGI which represents the income of the child, when computing his or her Virginia income tax liability. In the case of a combined (filing status 4) return where each spouse reports his or her income, the income of the child may be allocated either to the husband or the wife, so long as the total FAGI listed on their Virginia return equals the FAGI reported on their federal return.
Rulings of the Tax Commissioner