From the Internal Revenue Service: "If you and your child both receive benefits, you should calculate the taxability of your benefits separately from the taxability of your child's benefits." The IRS also states that "The taxability of benefits must be determined using the income of the person entitled to receive the benefits." In other words, if the benefits are in the child's own name, then the child's social security benefits must be reported on the child's taxes although the IRS states that "generally a child will not receive enough additional income to make the child's social security benefits taxable." See http://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/Social-Security-Income/Survivors'-Benefits/Survivors'-Benefits and http://www.irs.gov/pub/irs-pdf/p915.pdf for more details.
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