Kids Earning Income? Include Them on Your Return

Does your kid have income? You may be able to report that income on your return and avoid the headaches (and cost) of filing another tax return.

Here are some guidelines. Your child must be under 14 as of Jan. 1, 2003, and have gross income -- from interest and dividends only -- of less than $7,500. If this is the case, you can file a form 8814 and elect to report that income on their return. Keep in mind, though, that doing so increases your overall adjusted gross income -- which could make you ineligible for certain tax breaks.