Making the election to report a child”s interest and dividends on the parent”s return (using Form 8814) can be favorable to the parent with respect to:
a. Incorrect. The election increases the parent”s AGI, which can limit the deduction for student loan interest.
b. Correct. The election increases the parent”s AGI, which can mean taxpayers who make large charitable contributions that were limited by the 50%- of-AGI rule may be able to claim an increased deduction for charitable contributions.
c. Incorrect. The election increases the AGI threshold for claiming an itemized deduction for medical expenses, thus decreasing the allowable deduction.
d. Incorrect. The election can result in a lower credit for child and dependent care expenses because the credit percentage is tied to AGI.