If your child received a Form 1099-INT, you only need to do something about it when the interest (plus any other unearned income) crosses the dependent filing threshold. For the 2026 tax year, that line is $1,350. Below it, no return is required and reporting a 1099-INT for a minor child is optional at best. Above it, the income has to be reported, and you have a choice: add it to your own Form 1040 using Form 8814, or file a separate return in the child’s name.
The 1099-INT itself is just an information copy. The bank sent one to you and one to the IRS, which means the agency already has the number tied to your child’s Social Security number. Whether you file has nothing to do with whether the form arrived.
When the 1099-INT Actually Triggers a Return
Banks and brokerages must issue Form 1099-INT to anyone who earned at least $10 in interest, children included. The form goes out under the Social Security number on the account, so a savings account, CD, or UTMA/UGMA custodial account in your child’s name produces a 1099-INT to the child.
Interest is unearned income, and dependents have a low threshold for it. A dependent child must file a federal return for 2026 if unearned income exceeds $1,350. If the child also has a job, a return is required when gross income exceeds the larger of $1,350 or earned income plus $450.
The $1,350 figure is also the dependent’s standard deduction when there’s no earned income. A child whose only income is $1,200 of interest owes nothing and doesn’t have to file. Cross $1,350 and a return is required. Cross $2,700 in unearned income and the Kiddie Tax rules kick in on top.
One point worth flagging: if the account paid less than $10 and no 1099-INT was issued, the interest is still taxable and still counts toward the filing threshold. The absence of a form doesn’t erase the income.
Option 1: Add the Child’s Interest to Your Own Return (Form 8814)
The simpler path, when it’s available, is to include the child’s income on your Form 1040 by attaching Form 8814. You skip preparing a separate return entirely.
Form 8814 is only available if all of these are true:
- The child’s only income was interest, dividends, and capital gain distributions. No wages. No gains from actually selling assets.
- The child’s gross income for 2026 was under $13,500.
- No estimated tax payments were made in the child’s name, and nothing was withheld under backup withholding.
- The child meets the age requirements for the Kiddie Tax (see below).
Watch the capital gains distinction. Capital gain distributions reported on a 1099-DIV are fine. Gains from selling stock or other holdings, which show up on a 1099-B, disqualify the election. If your child’s custodial account sold anything during the year, Form 8814 is off the table.
The trade-off: the child’s income increases your adjusted gross income. A higher AGI can shrink or eliminate income-sensitive credits, education benefits, and other deductions. For a bank account with a few hundred dollars of interest, the convenience wins easily. For a custodial account throwing off several thousand a year, run the numbers both ways before you elect.
Option 2: File a Separate Return for the Child (Form 8615)
When Form 8814 doesn’t fit, or when the AGI hit isn’t worth it, the child files their own Form 1040. If unearned income exceeds $2,700, Form 8615 gets attached to calculate the Kiddie Tax.
Form 8615 asks for the parent’s name, Social Security number, and taxable income, because it uses the parent’s rate to tax the child’s unearned income above $2,700. The calculated tax flows back onto the child’s 1040 as their total tax.
On the child’s own return, the standard deduction is the greater of $1,350 or earned income plus $450. A child with only interest and no job gets $1,350, and every dollar above that is taxable.
How the Kiddie Tax Changes the Numbers
The Kiddie Tax exists so parents can’t shift investments into a child’s name and get them taxed at the child’s low rate. For 2026, unearned income breaks into three tiers:
- The first $1,350 is covered by the child’s standard deduction and isn’t taxed.
- The next $1,350 is taxed at the child’s rate, typically 10% on ordinary interest.
- Everything above $2,700 is taxed at the parent’s marginal rate, which can run as high as 37%.
The Kiddie Tax applies when, at year end, the child is:
- Under 18;
- Age 18 and earned income didn’t cover more than half their own support; or
- A full-time student ages 19 through 23 whose earned income didn’t cover more than half their own support.
The child must have at least one living parent and cannot file a joint return. Once the child ages out or starts covering more than half their own support from a job, the Kiddie Tax stops applying and all investment income is taxed at the child’s own rate.
Who Signs the Return
A young child can’t sign a return, so the parent or legal guardian signs the child’s name followed by “By [parent’s signature], parent for minor child.” The parent is responsible for filing the return and paying any tax due. Even with an older teenager who can sign, the parent stays on the hook for making sure a required return is actually filed.
What Happens If You Skip Filing
Under $1,350 in unearned income, there’s nothing to file and nothing to worry about. Above that threshold, ignoring the return creates real exposure. The failure-to-file penalty is 5% of unpaid tax per month, capped at 25%. Failure-to-pay adds 0.5% per month, also capped at 25%. Interest runs on top, compounding daily; the IRS underpayment rate for the second quarter of 2026 is 6%.
The dollars on a child’s savings account are usually small, so the penalties don’t sting the way they would on an adult return. The bigger issue is that the IRS has the 1099-INT on file under your child’s Social Security number. Unfiled years stack up, interest keeps running, and the cleanup gets worse the longer it waits.
Don’t Forget State Tax
Federal is only half the picture. Most states with an income tax set their own filing thresholds for dependents with unearned income, and those numbers don’t always match the federal $1,350. Some states are lower, meaning a child who owes no federal tax can still owe state tax on the same interest. Check your state’s department of revenue for the rules that apply to dependent children with investment income.