How to Report Interest on Child's CDs for Tax Filing

Hey everyone! Need some advice on my tax situation. I'm filing through FreeTaxUSA and while our taxes are generally straightforward, I've hit a snag with my twins' savings. Both my 8-year-olds have their own CDs at the bank, and I just received 1099-INT forms for each of them with their names on them. I'm confused about how to properly report this interest income on my tax return. When I checked the IRS website, it mentioned attaching Form 8814 to my Form 1040, but I can't figure out how to do this in FreeTaxUSA's system. The interest amounts aren't huge, but I want to make sure I'm handling everything correctly. Has anyone dealt with reporting children's interest income before? Any guidance would be super appreciated!

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18 comments

Sarah Ali

•8M

You've got a few options for reporting your children's interest income. Since they each received their own 1099-INT forms, you can either: 1) Include it on your return using Form 8814 (Parents' Election to Report Child's Interest and Dividends). This is typically easier if the interest is minimal. In FreeTaxUSA, you should be able to find this under "Miscellaneous" or "Other Tax Situations" - look for something like "Child's Interest and Dividends." You'll need to enter each child's information separately. 2) File separate returns for each child. This is usually not necessary unless they have significant income, but it's an option. The benefit of using Form 8814 is that you avoid having to file separate returns for your children. However, including their income on your return might slightly increase your AGI, which could potentially affect certain deductions or credits.

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Sarah Ali

•8M

For 2024 taxes (filed in 2025), you can use Form 8814 if your child's interest and dividend income was less than $11,600 and consisted only of interest, dividends, and capital gain distributions. If it's just $180, that's well under the threshold, so including it on your return would be simpler. Filing a separate return would make sense if your child had earned income (from a job) or if there would be a tax advantage based on your tax bracket versus the kiddie tax rates. For most families with children earning under $2,300 in unearned income, using Form 8814 is the easier option.

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Avery Saint

•8M

It works with all major tax software - TurboTax, H&R Block, FreeTaxUSA, and others. It basically gives you the exact menu paths to follow in whichever software you're using, so you don't have to hunt around for where to enter specific information. As for security, they use bank-level encryption and don't store your documents after analysis. I was hesitant too initially, but they explain on their site that they use the same security standards as financial institutions. I found it really helpful because FreeTaxUSA does have the capability to handle this situation, but finding exactly where to enter Form 8814 information wasn't intuitive for me at all.

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Keith Davidson

•8M

I was really skeptical about using taxr.ai at first, but after struggling with the exact same child interest reporting issue, I gave it a try. I uploaded my kids' 1099-INTs and my other documents, and it immediately identified which forms I needed and exactly where to find them in FreeTaxUSA. Honestly it saved me from having to call customer support or dig through help articles. The step-by-step guidance was spot on - just had to follow the navigation paths it gave me to find the Form 8814 section that I couldn't locate before.

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Ezra Bates

•8M

If you're having trouble reaching the IRS to ask questions about this Form 8814 situation, I'd recommend trying https://claimyr.com - they helped me get through to an actual IRS agent when I had a similar question about my nephew's investment income. There's also a demo of how it works at https://youtu.be/_kiP6q8DX5c if you want to see it in action. I was on hold with the IRS for hours before I found this service, and then got connected to an agent within 20 minutes who walked me through exactly how to report the interest income correctly.

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Ezra Bates

•8M

It doesn't just call the IRS for you - it uses some kind of technology that keeps your place in the IRS phone queue so you don't have to stay on hold. They notify you when you're about to connect with an agent so you just jump on at that point. It saved me from having to sit through hours of that awful hold music. No, it's definitely not a scam. The reason the IRS keeps hanging up is exactly why this service exists - they have a system that holds your place in line through the busy signals and "call back later" messages that would normally force you to start over.

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Sophia Carson

•8M

I need to eat my words. After posting that skeptical comment, I was still struggling with a question about my kid's 1099-INT that I couldn't figure out, so I decided to try Claimyr out of desperation. I was absolutely shocked when they got me through to an IRS representative in about 45 minutes. The agent walked me through exactly how to report my daughter's CD interest in my tax software and explained that I needed to use the Form 8814 section which was buried in a submenu I never would have found. Honestly saved me from making a mistake on my return.

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Elijah Knight

•8M

There's no hard and fast rule about what's "substantial" - it depends on your individual tax situation. For $320, I probably wouldn't bother with a separate return unless you're right at the threshold for some income-based benefit or credit. In my case, I had nearly $2,000 in interest for my child from a settlement, and including that on my return would have pushed me into a different income bracket for my student loan payments. Every situation is different, so you might want to calculate your return both ways if you're concerned.

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