CA Parents’ Election to Report Child’s Interest & Dividends – Form 3803
California parents may elect to report their child’s interest and dividend income on their own California state tax return using Form FTB 3803. This election allows parents to include their child’s investment income on their Form 540 or Form 540NR, eliminating the need for the child to file a separate return.
Who Qualifies?
Parents may make this election if their child meets all of the following conditions:
- The child is under age 19, or under age 24 and a full-time student.
- The child’s total interest and dividend income for the year is $2,700 or less.
- The parent files Form 540 (California Resident Income Tax Return) or Form 540NR (California Nonresident or Part-Year Resident Income Tax Return).
Parents who are married or in a registered domestic partnership (RDP) and file a joint return qualify. If unmarried and not in an RDP, only the parent with higher taxable income may make the election if they lived together with the child during the year.
How to Complete Form FTB 3803
Complete the form by entering the following information for each qualifying child:
- Line 1a: Child’s taxable interest income (from federal Form 1099-INT, box 1a).
- Line 1b: Child’s tax-exempt interest income (do not include in taxable income).
- Line 2: Child’s ordinary dividends (from federal Form 1099-DIV, box 1a).
- Line 3: Child’s capital gain distributions (from federal Form 1099-DIV, box 2a).
Note: If your child received income as a nominee (i.e., the funds belong to someone else), mark “ND” next to the amount and exclude it from the total.
Calculating Taxable Amount
- Line 4: Add lines 1a, 2, and 3. If total is $2,700 or less, proceed to line 7. If $13,500 or more, the child must file their own return.
- Line 5: Enter $2,700 (base amount).
- Line 6: Subtract line 5 from line 4. This is the taxable amount to report on your return.
If you have multiple children, file a separate Form FTB 3803 for each. The tax calculated on line 9 of each form must be added to your total tax on Form 540 or Form 540NR, line 31, and you must check the “FTB 3803” box.
Important Notes
- Capital gain distributions must be reported on Schedule D if you have other capital gains/losses.
- You cannot reduce the child’s income by deductions they would otherwise claim (e.g., early withdrawal penalties).
- The election must be made by filing Form FTB 3803 with your California return by the due date (including extensions).
Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions before filing.
Source:
Form FTB 3803 Instructions