Table of Contents
If the child's parents were married to each other and filed a joint return, enter the name and social security number (SSN) of the parent who is listed first on the joint return.
If the parents were married but filed separate returns, enter the name and SSN of the parent who had the higher taxable income. If you do not know which parent had the higher taxable income, see Pub. 929.
If the parents were unmarried, treated as unmarried for federal income tax purposes, or separated by either a divorce or separate maintenance decree, enter the name and SSN of the parent with whom the child lived for most of the year (the custodial parent).
If the child had no earned income (defined below), enter the child's adjusted gross income from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 36.
If the child had earned income, use the worksheet on page 2 to figure the amount to enter on line 1. But use Pub. 929 instead of the worksheet to figure the amount to enter on line 1 if the child:
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Files Form 2555 or 2555-EZ (relating to foreign earned income),
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Has a net loss from self-employment, or
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Claims a net operating loss deduction.
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Described in 42 U.S.C. 1396p(c)(2)(B)(iv) and established solely for the benefit of an individual under 65 years of age who is disabled, and
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All the beneficiaries of which are determined by the Commissioner of Social Security to have been disabled for some part of the tax year within the meaning of 42 U.S.C. 1382c(a)(3).
Child's Investment Income Worksheet—Line 1
1. | Enter the amount from the child's Form 1040, line 22; Form 1040A, line 15; or Form 1040NR, line 23, whichever applies | |
2. | Enter the child's earned income (defined on page 1) plus the amount of any penalty on early withdrawal of savings from the child's Form 1040, line 30, or Form 1040NR, line 29, whichever applies | |
3. | Subtract line 2 from line 1. Enter the result here and on Form 8615, line 1 |
If the child itemized deductions, enter the larger of:
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$1,700, or
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$850 plus the portion of the amount on Schedule A (Form 1040), line 29 (or Form 1040NR, Schedule A, line 17), that is directly connected with the production of the investment income on Form 8615, line 1.
If the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion or housing exclusion, enter the amount from line 3 of the child's Foreign Earned Income Tax Worksheet, instead of the child's taxable income. (The Foreign Earned Income Tax Worksheet that must be used is the one in Pub. 4655, not the worksheet on page 34 of the 2007 Instructions for Form 1040.)
If the parent filed a joint return, enter the taxable income shown on that return even if the parent's spouse is not the child's parent.
If the Foreign Earned Income Tax Worksheet was used to figure the parent's tax, enter the amount from line 3 of the parent's Foreign Earned Income Tax Worksheet, instead of the parent's taxable income. (The parent must use the Foreign Earned Income Tax Worksheet in Pub. 4655, not the worksheet on page 34 of the 2007 Instructions for Form 1040.)
Enter on this line the total of lines 5, 6, and 7. You must determine the amount of net capital gain and qualified dividends included on this line before completing line 9.
Line 5 Worksheet #1
Use this worksheet only if line 2 of the child's Form 8615 is $1,700 and lines 3 and 5 are the same amount. | ||
1. | Enter the child's qualified dividends | |
2. | Enter the child's net capital gain | |
3. | Enter the amount from the child's Form 8615, line 1 | |
4. | Divide line 1 by line 3. Enter the result as a decimal (rounded to at least three places). Do not enter more than 1.000 | |
5. | Divide line 2 by line 3. Enter the result as a decimal (rounded to at least three places). Do not enter more than 1.000 | |
6. | Multiply $1,700 by line 4 | |
7. | Multiply $1,700 by line 5 | |
8. | Qualified dividends on Form 8615, line 5. Subtract line 6 from line 1 (but do not enter less than zero or more than the
amount on Form 8615,
line 5) |
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9. | Net capital gain on Form 8615, line 5. Subtract line 7 from line 2 (but do not enter less than zero or more than the excess of Form 8615, line 5, over line 8 of this worksheet) |
Line 5 Worksheet #2
Use this worksheet only if line 2 of the child's Form 8615 is more than $1,700 and lines 3 and 5 are the same amount. | ||
1. | Enter the child's qualified dividends | |
2. | Enter the child's net capital gain | |
3. | Add lines 1 and 2 | |
4. | Divide line 1 by line 3. Enter the result as a decimal (rounded to at least three places) | |
5. | Enter the child's itemized deductions directly connected with the production of the child's qualified dividends or net capital gain | |
6. | Multiply line 4 by line 5 | |
7. | Subtract line 6 from line 5 | |
8. | Subtract line 7 from line 2 | |
9. | Subtract line 6 from line 1 | |
10. | Enter the amount from the child's Form 8615, line 1 | |
11. | Divide line 1 by line 10. Enter the result as a decimal (rounded to at least three places). Do not enter more than 1.000 | |
12. | Divide line 2 by line 10. Enter the result as a decimal (rounded to at least three places). Do not enter more than 1.000 minus the amount on line 11 | |
13. | Multiply $850 by line 11 | |
14. | Multiply $850 by line 12 | |
15. | Qualified dividends on Form 8615, line 5. Subtract line 13 from line 9 (but do not enter less than zero or more than the amount on Form 8615, line 5) | |
16. | Net capital gain on Form 8615, line 5. Subtract line 14 from line 8 (but do not enter less than zero or more than the excess of Form 8615, line 5, over line 15 of this worksheet) | |
Line 5 Worksheet #3
Use this worksheet only if the child's Form 8615, line 5, is less than line 3. | ||
1. | Enter the child's qualified dividends | |
2. | Enter the child's net capital gain | |
3. | Add lines 1 and 2 | |
4. | Divide line 1 by line 3. Enter the result as a decimal (rounded to at least three places) | |
5. | If the child itemized deductions, enter the child's itemized deductions directly connected with the production of the income on line 3 | |
6. | Multiply line 4 by line 5 | |
7. | Subtract line 6 from line 5 | |
8. | Subtract line 7 from line 2 | |
9. | Subtract line 6 from line 1 | |
10. | If the child can claim his or her own exemption, enter $3,400*. Otherwise, enter -0- | |
11. | If the child itemized deductions, enter the child's itemized deductions not directly connected with the production of the income on line 3. Otherwise, enter the child's standard deduction | |
12. | Add lines 10 and 11 | |
13. | Enter the child's adjusted gross income (Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 36) | |
14. | Divide line 3 by line 13. Enter the result as a decimal (rounded to at least three places). Do not enter more than 1.000 | |
15. | Multiply line 12 by line 14 | |
16. | Multiply line 15 by line 4 | |
17. | Subtract line 16 from line 15 | |
18. | Qualified dividends on Form 8615, line 5. Subtract line 16 from line 9. Enter the result here (but do not enter less than zero or more than the amount on Form 8615, line 5) | |
19. | Net capital gain on Form 8615, line 5. Subtract line 17 from line 8 (but do not enter less than zero or more than the excess of Form 8615, line 5, over line 18 of this worksheet) | |
* If you enter more than $117,300 on line 13, see the Deduction for Exemptions Worksheet in the Form 1040, Form 1040A, or Form 1040NR instructions for the amount to enter on line 10. |
Figure the tax using the Tax Table, Tax Computation Worksheet, Qualified Dividends and Capital Gain Tax Worksheet, Schedule D Tax Worksheet, or Schedule J, whichever applies. If line 8 includes any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040, 1040A, or 1040NR instructions to figure the tax, unless you have to use the Schedule D Tax Worksheet or Schedule J (see below).
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On line 1, enter the amount from Form 8615, line 8.
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On line 2, enter the amount of qualified dividends included on Form 8615, line 8. (See the instructions for line 8.)
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On line 3, enter the amount of the net capital gain included on Form 8615, line 8. (See the instructions for line 8.)
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Complete line 4 following the worksheet instructions.
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If you are completing the worksheet in the Form 1040 instructions, enter on line 5 the total of the amounts, if any, on line 4g of all Forms 4952 filed by the child, parent, or any other child.
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Complete line 6 (line 5 of the worksheet in the Form 1040A or Form 1040NR instructions) following the worksheet instructions.
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If the Foreign Earned Income Tax Worksheet was used to figure the parent's tax, go to step 8 below. Otherwise, skip steps 8, 9, and 10 below, and go to step 11.
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Determine whether there is a line 8 capital gain excess. To do this, subtract from line 1 of the worksheet the amount on line 2 of the parent's Foreign Earned Income Tax Worksheet. Subtract the result from line 6 of this Qualified Dividends and Capital Gain Tax Worksheet (line 5 of the worksheet in the Form 1040A or Form 1040NR instructions). If the result is more than zero, that amount is the line 8 capital gain excess. If the result is zero or less, there is no line 8 capital gain excess.
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If there is no line 8 capital gain excess, skip step 10 below and go to step 11.
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If there is a line 8 capital gain excess, complete a second Qualified Dividends and Capital Gain Tax Worksheet as instructed above and in step 11 below but in its entirety and with the following additional modifications.
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Reduce the amount you would otherwise enter on line 3 (but not below zero) by the line 8 capital gain excess.
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Reduce the amount you would otherwise enter on line 2 (but not below zero) by any of the line 8 capital gain excess not used in (a) above.
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Complete lines 7 through 19 (lines 6 through 17 of the worksheet in the Form 1040A or Form 1040NR instructions) following the worksheet instructions. Use the parent's filing status to complete lines 8, 16, and 18 (lines 6, 14, and 16 of the worksheet in the Form 1040A or Form 1040NR instructions).
If the parent filed a joint return, enter the tax shown on that return even if the parent's spouse is not the child's parent.
If the Foreign Earned Income Tax Worksheet was used to figure the parent's tax, enter the amount from line 4 of the parent's Foreign Earned Income Tax Worksheet, instead of the parent's tax from Form 1040, line 44. (The parent must use the Foreign Earned Income Tax Worksheet in Pub. 4655, not the worksheet on page 34 of the 2007 Instructions for Form 1040.)
Figure the tax using the Tax Table, Tax Computation Worksheet, Qualified Dividends and Capital Gain Tax Worksheet, Schedule D Tax Worksheet, or Schedule J, whichever applies. If line 14 includes any net capital gain or qualified dividends (see below), use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. However, if the child has to file Schedule D and line 18 or line 19 of the child's Schedule D is more than zero, use the Schedule D Tax Worksheet to figure this tax instead. See Pub. 929 for details on how to figure the line 15 tax using the Schedule D Tax Worksheet.
Before using the Qualified Dividends and Capital Gain Tax Worksheet to figure the line 15 tax, you will need to know the amount of net capital gain and qualified dividends, if any, included on line 14.
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On line 1, enter the amount from Form 8615, line 14.
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On line 2, enter the amount of the qualified dividends included on Form 8615, line 14. (See Net capital gain and qualified dividends on line 14 on this page.)
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On line 3, enter the amount of the net capital gain included on Form 8615, line 14. (See Net capital gain and qualified dividends on line 14 on this page.)
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Complete line 4 following the worksheet instructions.
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If you are completing the worksheet in the Form 1040 instructions, leave line 5 blank.
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Complete lines 6 through 19 (lines 5 through 17 of the worksheet in the Form 1040A or Form 1040NR instructions) following the worksheet instructions. Use the child's filing status to complete lines 8, 16, and 18 of the worksheet for Form 1040 (lines 6, 14, and 16 of the worksheet for Form 1040A or Form 1040NR).
Figure the tax using the Tax Table, Tax Computation Worksheet, Qualified Dividends and Capital Gain Tax Worksheet, Schedule D Tax Worksheet, or Schedule J, whichever applies. If line 4 includes any qualified dividends or net capital gain, use the Qualified Dividends and Capital Gain Tax Worksheet to figure the tax unless the Schedule D Tax Worksheet has to be used instead. If any farming or fishing income is included on line 4, the tax may be less if you use Schedule J.
If the child files Form 2555 or 2555-EZ, do not enter the amount from Form 8615, line 18, on the child's Form 1040, line 44. Instead, enter the amount from Form 8615, line 18, on line 4 of the child's Foreign Earned Income Tax Worksheet. (Use the Foreign Earned Income Tax Worksheet in Pub. 4655, not the worksheet on page 34 of the 2007 Instructions for Form 1040.) Then complete the rest of the Foreign Earned Income Tax Worksheet to figure the child's tax.
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