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Here’s some history - and it’s on your nickel

SHARE Here’s some history - and it’s on your nickel

Question: My kids often ask me questions about the origin of cash and coins that leave me scratching my head.

Why, they want to know, is a nickel bigger than a dime even though it's worth less? Would Dr. T like to take a crack at that one?

Answer: Dr. T has made quite a study of money facts and figures, and I'll be happy to satisfy your kids' curiosity (and yours too).

The size differential dates back to the time when "major" U.S. coins (the dollar, half-dollar, quarter and dime) were made of silver. The smaller coins were made in proportion to the dollar in size and weight. So the half-dollar was half the size of the dollar, the quarter was one-fourth as large and the dime one-tenth as large.

But the nickel and the penny weren't made of silver, so their size didn't matter. They were considered minor coins - small change, you might say - and at one time could be used to pay only very small debts.

Look for answers to other money puzzlers in future columns.

Question: My daughter earned more than $650 in interest and dividends in 1996. Do I have to file a separate tax return for her, or can I include her income on my return?

Answer: You can report your child's income on your return, especially now that Congress has straightened out a glitch in the law that penalized parents who took this route in the past. But you could still be better off filing a separate return for your daughter.

In 1995, the first $650 of a child's unearned income from interest and dividends was tax-free, and the next $650 was taxed at the child's low rate. But because of a congressional foul-up, only $500 was tax-free and $500 taxed at the lower rate if a child's income was reported on the parents' return.

Congress finally got around to fixing the mistake, so for 1996 returns the $650 limits apply either way. But taking the shortcut may still cost you money. Higher-income taxpayers begin to lose deductions when their adjusted gross income passes certain levels, and including a child's income on your return will get you to those limits sooner.

Also, itemized deductions for medical care, miscellaneous expenses and casualty losses can all be squeezed, or wiped out, by your rising income.

And adding your child's income to your federal return could hike your family's state-tax bill.

All things considered, it makes sense to keep your child's income on a separate return.