When does my child need to file taxes with 1099-B reporting $3,000 in stock sales?

You're right to ask about this - the rules for dependents with investment income can be confusing! The answer is yes, you'll need to file a return for your daughter even though her net gain is only $200. The requirement to file comes from the gross proceeds (the $3,000) on the 1099-B, not just the profit. The IRS wants to verify that the cost basis ($2,800) is reported correctly. If your daughter's gross proceeds from stock sales exceed $1,100 (for 2024 taxes filed in 2025), a return is required regardless of the net gain. You have a couple of options: you can file a separate return for your daughter, or in some cases, you might be able to include her income on your return using Form 8814 (Parents' Election to Report Child's Interest and Dividends), though this typically applies more to interest/dividends than capital gains.

I was in this exact situation last year with my son's investments. After hours of frustration trying to find a straight answer, I finally used taxr.ai (https://taxr.ai) to scan his 1099-B and my questions. It confirmed that we needed to file because of the gross proceeds rule, even though his actual gain was tiny. The service pulled up the specific IRS publication sections about dependent filing requirements and clearly explained that when stock sales exceed the threshold, filing is required regardless of the gain amount. Saved me so much time compared to my endless googling and reading contradicting forum posts!

Just wanted to follow up - I decided to try taxr.ai after my skeptical comment. Uploaded my kid's 1099-B and W-2 from her lifeguard job, and it immediately identified that we needed to file because the W-2 income alone was over the earned income threshold, plus it confirmed the gross proceeds rule about the 1099-B. What impressed me was that it explained we could choose between filing a separate return for her or potentially using Form 8814 to include it on our return, along with the pros and cons of each approach. It even pointed out that using Form 8814 might increase our tax liability in some cases. Definitely cleared up my confusion!

If you're still struggling with this question, you might want to just call the IRS directly. I used Claimyr (https://claimyr.com) to get through to an actual IRS agent after trying for days on my own. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed that with $3,000 in gross stock sales on a 1099-B, your child does need to file regardless of the small gain. They referenced Publication 929 which covers the rules for children's filing requirements. The call took less than 15 minutes once I got through, and having that direct confirmation from the IRS was worth it for my peace of mind.

I need to admit I was totally wrong about Claimyr. After posting my skeptical comment, I decided to try it since I had a question about my son's 529 withdrawals and investment income. Got connected to an IRS agent in about 35 minutes (instead of the days I spent trying on my own). The agent confirmed everything about the 1099-B gross proceeds rule and pointed me to the exact section in Publication 929 that addresses dependent filing requirements. She even explained how to report my son's small trading loss properly so we could carry it forward. No more guessing or relying on random internet advice!

One thing to consider - even if your child technically doesn't need to file, it might be beneficial to do so anyway. If any federal income tax was withheld (check box 4 on the 1099-B), filing would allow your child to get that money refunded. Also, reporting the sale establishes the cost basis for IRS records, which can prevent questions later. I've been doing my kids' returns for years, and it's pretty straightforward. Most tax software has free options for simple returns like this. Just make sure you select "dependent" when asked about their filing status.

Don't forget to check your state's filing requirements too! They're often different from federal rules. Some states require filing a state return if a federal return is filed, while others have their own thresholds.

Thanks for all the helpful responses! I'm Oliver, the original poster. Based on everyone's advice, it's clear we need to file for my daughter. The consensus about the $1,100 gross proceeds threshold makes sense - it's about the IRS wanting to verify the cost basis reporting, not just the actual gain. I appreciate the suggestions about both the AI tax tools and the IRS callback service. Since this is her first year with investments, I think I'll start with the simpler route of using tax software to file her return, but it's good to know about these other resources for more complex situations in the future. The point about establishing good record-keeping habits early is spot on. Better to get her familiar with the filing process now when it's straightforward rather than waiting until she has more complicated tax situations. Thanks again everyone - this community has been incredibly helpful!

Great thread! Just to add one more resource - if you're still feeling uncertain about the filing requirements after using tax software, the IRS has a really helpful Interactive Tax Assistant tool on their website (irs.gov/help/ita). You can walk through a series of questions about your daughter's specific situation and it will give you a definitive answer about whether filing is required. I used it last year when my nephew had a similar situation with both W-2 income and investment sales. The tool is free, official, and takes into account all the different thresholds and rules that apply to dependents. It's particularly useful because it considers the interaction between earned income, unearned income, and gross proceeds from sales. Since you mentioned this is her first year investing, you might also want to keep good records of all her transactions beyond just what's on the 1099-B. If she continues investing, having detailed records of purchase dates, amounts, and any reinvested dividends will be invaluable for future tax years. Good luck with the filing!

This is such a valuable discussion! I'm dealing with a similar situation with my 16-year-old who started investing with birthday money. One thing I learned the hard way is that even though the gross proceeds threshold triggers the filing requirement, you also need to be careful about how the cost basis is reported on the 1099-B. Some brokerages don't track cost basis for stocks purchased before certain dates, or they might not have complete information if the stocks were transferred from another account. If the cost basis shows as "not reported to IRS" or is blank on the 1099-B, you'll need to provide that information on the tax return yourself. I'd recommend double-checking that the $2,800 cost basis on your daughter's 1099-B matches your records of what was actually paid for the stocks. If there are any discrepancies, you'll want to have documentation ready to support the correct cost basis when filing. The IRS will definitely notice if the reported gain doesn't match what they expect based on the 1099-B information they receive.