Table of Contents
- Part 1. Rules for All Dependents
- Filing Requirements
- Should a Return Be Filed Even If Not Required?
- Responsibility for Child's Return
- Standard Deduction
- Dependent's Own Exemption
- Withholding From Wages
- Part 2. Tax on Investment Income of Certain Children
- Parent's Election To Report Child's Interest and Dividends
- Tax for Certain Children Who Have Investment Income of More Than $1,800
- Providing Parental Information (Form 8615, Lines A–C)
- Step 1. Figuring the Child's Net Investment Income (Form 8615, Part I)
- Step 2. Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II)
- Step 3. Figuring the Child's Tax (Form 8615, Part III)
- Alternative Minimum Tax
- Illustrated Example
This part of the publication discusses the filing requirements for dependents, who is responsible for a child's return, how to figure a dependent's standard deduction and exemption (if any), and whether a dependent can claim exemption from federal income tax withholding.
Whether a dependent has to file a return generally depends on the amount of the dependent's earned and unearned income and whether the dependent is married, is age 65 or older, or is blind.
A dependent may have to file a return even if his or her income is below the amount that would normally require a return. See Other Filing Requirements, later.The following sections apply to dependents with:
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Earned income only,
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Unearned income only, and
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Both earned and unearned income.
To find out whether a dependent must file, read the section that applies, or use Table 1 on the next page.
A dependent must file a return if all his or her income is earned income, and the total is more than the amount listed in the following table.
Marital Status | Amount | |
Single | ||
Under 65 and not blind | $5,450 | |
Either 65 or older or blind | $6,800 | |
65 or older and blind | $8,150 | |
Married* | ||
Under 65 and not blind | $5,450 | |
Either 65 or older or blind | $6,500 | |
65 or older and blind | $7,550 | |
*If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). |
Example.
William is 16. His mother claims an exemption for him on her income tax return. He worked part time on weekends during the school year and full time during the summer. He earned $5,600 in wages. He did not have any unearned income.
He must file a tax return because he has earned income only and his total income is more than $5,450. If he were blind, he would not have to file a return because his total income is not more than $6,800.
A dependent must file a return if all his or her income is unearned income, and the total is more than the amount listed in the following table.
Marital Status | Amount | |
Single | ||
Under 65 and not blind | $ 900 | |
Either 65 or older or blind | $2,250 | |
65 or older and blind | $3,600 | |
Married* | ||
Under 65 and not blind | $ 900 | |
Either 65 or older or blind | $1,950 | |
65 or older and blind | $3,000 | |
*If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). |
Example.
Sarah is 18 and single. Her parents can claim an exemption for her on their income tax return. She received $970 of taxable interest and dividend income. She did not work during the year.
She must file a tax return because she has unearned income only and her total income is more than $900. If she were blind, she would not have to file a return because she has unearned income only and her total income is not more than $2,250.
Filing Requirement Worksheet | |||||
for Most Dependents | |||||
1. | Enter dependent's earned income plus $300 |
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2. | Minimum amount | $900 | |||
3. | Compare lines 1 and 2. Enter the larger amount |
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4. | Maximum amount | 5,450 | |||
5. | Compare lines 3 and 4. Enter the smaller amount |
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6. | Enter the dependent's gross (total) income. If line 6 is more than line 5, the dependent must file an income tax return. If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. |
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Table 1. 2008 Filing Requirements for Dependents
If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a return. | ||||||
See the definitions of “dependent,”“earned income,”“unearned income,” and “gross income” in the Glossary. | ||||||
Single dependents—Were you either age 65 or older or blind? | ||||||
No. You must file a return if any of the following apply. | ||||||
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Yes. You must file a return if any of the following apply. | ||||||
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Married dependents—Were you either age 65 or older or blind? | ||||||
No. You must file a return if any of the following apply. | ||||||
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Yes. You must file a return if any of the following apply. | ||||||
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Example 1.
Joe is 20, single, not blind, and a full-time college student. His parents provide more than half of his support and claim an exemption for him on their income tax return. He received $200 taxable interest income and earned $2,750 from a part-time job.
He does not have to file a tax return because his total income of $2,950 ($200 interest plus $2,750 in wages) is not more than $3,050, the amount on line 5 of his filled-in Filing Requirement Worksheet for Most Dependents (shown next).
Filing Requirement Worksheet | |||||
for Most Dependents | |||||
1. | Enter dependent's earned income plus $300 |
$ 3,050 | |||
2. | Minimum amount | 900 | |||
3. | Compare lines 1 and 2. Enter the larger amount |
3,050 | |||
4. | Maximum amount | 5,450 | |||
5. | Compare lines 3 and 4. Enter the smaller amount |
3,050 | |||
6. | Enter the dependent's gross (total) income. If line 6 is more than line 5, the dependent must file an income tax return. If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. | $ 2,950 | |||
Example 2.
The facts are the same as in Example 1 except that Joe had $600 taxable interest income.
He must file a tax return because his total income of $3,350 ($600 interest plus $2,750 wages) is more than $3,050, the amount on line 5 of his filled-in worksheet (shown next).
Filing Requirement Worksheet | |||||
for Most Dependents | |||||
1. | Enter dependent's earned income plus $300 |
$ 3,050 | |||
2. | Minimum amount | 900 | |||
3. | Compare lines 1 and 2. Enter the larger amount |
3,050 | |||
4. | Maximum amount | 5,450 | |||
5. | Compare lines 3 and 4. Enter the smaller amount |
3,050 | |||
6. | Enter the dependent's gross (total) income. If line 6 is more than line 5, the dependent must file an income tax return. If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. | $ 3,350 | |||
Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or Blind |
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1. | Enter dependent's earned income plus $300 |
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2. | Minimum amount | $900 | ||||||
3. | Compare lines 1 and 2. Enter the larger amount |
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4. | Maximum amount | 5,450 | ||||||
5. | Compare lines 3 and 4. Enter the smaller amount |
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6. | Enter the amount from the following table that applies to the dependent |
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Marital Status | Amount | |||||||
Single | ||||||||
Either 65 or older or blind | $1,350 | |||||||
65 or older and blind | $2,700 | |||||||
Married | ||||||||
Either 65 or older or blind | $1,050 | |||||||
65 or older and blind | $2,100 | |||||||
7. | Add lines 5 and 6. Enter the total | |||||||
8. | Enter the dependent's gross (total) income. If line 8 is more than line 7, the dependent must file an income tax return. If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more |
Example 3.
The facts are the same as in Example 2 except that Joe is also blind. He does not have to file a return because his total income of $3,350 is not more than $4,400, the amount on line 7 of his filled-in Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or Blind (shown next).
Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or Blind |
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1. | Enter dependent's earned income plus $300 |
$3,050 | ||||||
2. | Minimum amount | 900 | ||||||
3. | Compare lines 1 and 2. Enter the larger amount |
3,050 | ||||||
4. | Maximum amount | 5,450 | ||||||
5. | Compare lines 3 and 4. Enter the smaller amount |
3,050 | ||||||
6. | Enter the amount from the following table that applies to the dependent | 1,350 | ||||||
Marital Status | Amount | |||||||
Single | ||||||||
Either 65 or older or blind | $1,350 | |||||||
65 or older and blind | $2,700 | |||||||
Married | ||||||||
Either 65 or older or blind | $1,050 | |||||||
65 or older and blind | $2,100 | |||||||
7. | Add lines 5 and 6. Enter the total | 4,400 | ||||||
8. | Enter the dependent's gross (total) income. If line 8 is more than line 7, the dependent must file an income tax return. If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more | $3,350 |
Some dependents may have to file a tax return even if their income is below the amount that would normally require them to file a return.
A dependent must file a tax return if he or she owes any other taxes, such as:
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Social security and Medicare taxes on tips not reported to his or her employer or on wages received from an employer who did not withhold these taxes,
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Uncollected social security and Medicare or railroad retirement taxes on tips reported to his or her employer or on group-term life insurance,
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Alternative minimum tax,
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Additional tax on a health savings account from Form 8889, Part III,
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Recapture taxes, such as the tax from recapture of an education credit, or
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Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. But if the dependent is filing a return only because of this tax, the dependent can file Form 5329 by itself.
A dependent must also file a tax return if he or she:
Even if a dependent does not meet any of the filing requirements discussed earlier, he or she should file a tax return if either of the following applies.
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Income tax was withheld from his or her income.
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He or she qualifies for the earned income credit, additional child tax credit, health coverage tax credit, refundable credit for prior year minimum tax, first-time homebuyer credit, or recovery rebate credit. See the tax return instructions to find out who qualifies for these credits.
Generally, the child is responsible for filing his or her own tax return and for paying any tax, penalties, or interest on that return. If a child cannot file his or her own return for any reason, such as age, the child's parent or guardian is responsible for filing a return on his or her behalf.
If the child does not pay the tax due on this income, the parent may be liable for the tax.
The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the larger of:
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$900, or
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The individual's earned income plus $300, but not more than the regular standard deduction (generally $5,450).
However, the standard deduction is higher for a dependent who:
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Is 65 or older,
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Is blind,
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Paid state or local real estate taxes, or
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Has a net disaster loss from a federally declared disaster.
For more information about the higher standard deduction for real estate taxes or a net disaster loss, see Publication 501.
Certain dependents cannot claim any standard deduction. See Standard Deduction of Zero, later.
Worksheet 1. Standard Deduction Worksheet for Dependents
Use this worksheet only if someone can claim you (or your spouse, if filing jointly) as a dependent. Do not use this worksheet for a dependent who paid state or local real estate taxes or had a net disaster loss from a federally declared disaster; instead, use Worksheet 3 in Publication 501. |
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If you were 65 or older and/or blind, check the correct number of boxes below. Put the total number of boxes checked in box c and go to line 1. | |||||
a. | You | 65 or older | Blind | ||
b. | Your spouse, if claiming spouse's exemption |
65 or older | Blind | ||
c. | Total boxes checked | ||||
1. | Enter your earned income (defined below) plus $300. If none, enter -0-. | 1. | |||
2. | Minimum amount. | 2. | $900 | ||
3. | Compare lines 1 and 2. Enter the larger of the two amounts here. | 3. | |||
4. | Enter on line 4 the amount shown below for your filing status. | ||||
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4. | ||||
5. | Standard deduction. | ||||
a. | Compare lines 3 and 4. Enter the smaller amount here. If under 65 and not blind, stop here. This is your standard deduction. Otherwise, go on to line 5b. | 5a. | |||
b. | If 65 or older or blind, multiply $1,350 ($1,050 if married) by the number in box c above. Enter the result here. | 5b. | |||
c. | Add lines 5a and 5b. This is your standard deduction for 2008. | 5c. | |||
Earned incomeincludes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes any amount received as a scholarship that you must include in income. |
Example 1.
Michael is single, age 15, and not blind. His parents can claim him as a dependent on their tax return. He has taxable interest income of $800 and wages of $150. He did not pay real estate taxes or have a net disaster loss. He enters $450 (his earned income plus $300) on line 1 of Worksheet 1. On line 3, he enters $900, the larger of $450 or $900. Michael enters $5,450 on line 4. On line 5a, he enters $900, the smaller of $900 or $5,450. His standard deduction is $900.
Example 2.
Judy, a full-time student, is single, age 22, and not blind. Her parents can claim her as a dependent on their tax return. She has dividend income of $275 and wages of $2,500. She did not pay real estate taxes or have a net disaster loss. She enters $2,800 (her earned income plus $300) on line 1 of Worksheet 1. On line 3, she enters $2,800, the larger of $2,800 or $900. She enters $5,450 on line 4. On line 5a, she enters $2,800 (the smaller of $2,800 or $5,450) as her standard deduction.
Example 3.
Amy, who is single, is claimed as a dependent on her parents' tax return. She is 18 and blind. She has taxable interest income of $1,000 and wages of $2,000. She did not pay real estate taxes or have a net disaster loss. She enters $2,300 (her earned income plus $300) on line 1 of Worksheet 1. She enters $2,300 (the larger of $2,300 or $900) on line 3, $5,450 on line 4, and $2,300 (the smaller of $2,300 or $5,450) on line 5a. Because Amy is blind, she checks the box for blindness and enters “1” in box c at the top of Worksheet 1. She enters $1,350 (the number in box c times $1,350) on line 5b. Her standard deduction on line 5c is $3,650 ($2,300 + $1,350).
The standard deduction for the following dependents is zero.
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A married dependent filing a separate return whose spouse itemizes deductions.
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A dependent who files a return for a period of less than 12 months due to a change in his or her annual accounting period.
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A nonresident or dual-status alien dependent, unless the dependent is married to a U.S. citizen or resident alien at the end of the year and chooses to be treated as a U.S. resident for the year. See Publication 519, U.S. Tax Guide for Aliens, for information on making this choice.
Example.
Jennifer, who is a dependent of her parents, is entitled to file a joint return with her husband. However, her husband elects to file a separate return and itemize his deductions. Because he itemizes, Jennifer's standard deduction on her return is zero. She can, however, itemize any of her allowable deductions.
A person who can be claimed as a dependent on another taxpayer's return cannot claim his or her own exemption. This is true even if the other taxpayer does not actually claim the exemption.
Example.
James and Barbara can claim their child, Ben, as a dependent on their return. Ben is a college student who works during the summer and must file a tax return. Ben cannot claim his own exemption on his return. This is true even if James and Barbara do not claim him as a dependent on their return.
Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. If the employee claims exemption from withholding on Form W-4, the employer will not withhold federal income tax. The exemption from withholding does not apply to social security and Medicare taxes.
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For 2008, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability.
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For 2009, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability.
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The employee's total income will be more than the minimum standard deduction amount. This amount was $900 for 2008, but may be higher for 2009. Check the instructions for the 2009 Form W-4 for the correct amount.
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The employee's unearned income will be more than $300.
Example.
Guy is 17 and a student. During the summer he works part time at a grocery store. He expects to earn about $1,000 this year. He also worked at the store last summer and received a refund of all his withheld income tax because he did not have a tax liability. The only other income he expects during the year is $375 interest on a savings account. He expects that his parents will be able to claim him as a dependent on their tax return. He is not blind and will not claim adjustments to income, itemized deductions, an additional standard deduction, or tax credits on his return.
Guy cannot claim exemption from withholding when he fills out Form W-4 because his parents will be able to claim him as a dependent, his total income will be more than $900, the minimum standard deduction amount, and his unearned income will be more than $300.
The two rules that follow may affect the tax on the investment income of certain children.
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If the child's interest and dividend income (including capital gain distributions) total less than $9,000, the child's parent may be able to choose to include that income on the parent's return rather than file a return for the child. (See Parent's Election To Report Child's Interest and Dividends, later.)
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If the child's interest, dividends, and other investment income total more than $1,800, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. (See Tax for Certain Children Who Have Investment Income of More Than $1,800, later.)
For these rules, the term “child” includes a legally adopted child and a stepchild. These rules apply whether or not the child is a dependent.
These rules do not apply if neither of the child's parents were living at the end of the year.
If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the child's investment income. The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Certain Children Who Have Investment Income of More Than $1,800.
For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax.
Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends.
You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. If you do, your child will not have to file a return.
You can make this election only if all the following conditions are met.
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Your child was under age 19 (or under age 24 if a full-time student) at the end of the year.
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Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends).
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The child's gross income was less than $9,000.
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The child is required to file a return unless you make this election.
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The child does not file a joint return for the year.
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No estimated tax payment was made for the year, and no overpayment from the previous year was applied to this year under your child's name and social security number.
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No federal income tax was taken out of your child's income under the backup withholding rules.
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You are the parent whose return must be used when applying the special tax rules for children. (See Which Parent's Return To Use, earlier.)
These conditions are also shown in Figure 1.
The federal income tax on your child's income may be more if you make the Form 8814 election.
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The additional standard deduction for a blind child.
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The deduction for a penalty on an early withdrawal of your child's savings.
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Itemized deductions (such as your child's investment expenses or charitable contributions).
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Deduction for contributions to a traditional individual retirement arrangement (IRA).
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Deduction for student loan interest.
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Itemized deductions for medical expenses, certain casualty and theft losses, and certain miscellaneous expenses.
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Total itemized deductions.
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Personal exemptions.
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Credit for child and dependent care expenses.
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Child tax credit.
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Education tax credits.
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Earned income credit.
Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. Only the amount over $1,800 is added to your income. The amount over $1,800 is shown on Form 8814, line 6. Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. Include the amount from Form 8814, line 12, on Form 1040 or Form 1040NR, line 21. If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040 or Form 1040NR, line 21. On the dotted line next to line 21, enter “Form 8814” and the total of the Form 8814, line 12 amounts.
Note.
The tax on the first $1,800 is figured on Form 8814, Part II. See Figuring Additional Tax, later.
Example.
Fred is 6 years old. In 2008, he received dividend income of $1,900, which included $1,480 of ordinary dividends and a $420 capital gain distribution from a mutual fund. (None of the distributions were reported on Form 1099-DIV as unrecaptured section 1250 gain, section 1202 gain, or collectibles (28% rate) gain.) All of the ordinary dividends are qualified dividends. He has no other income and is not subject to backup withholding. No estimated tax payments were made under his name and social security number.
Fred's parents elect to include Fred's income on their tax return instead of filing a return for him.
They figure the amount to report on Form 1040, lines 9a and 9b, the amount to report on their Schedule D, line 13, and the amount to report on Form 1040, line 21, as follows.
They leave lines 1a and 1b of Form 8814 blank because Fred does not have any interest income. They enter his ordinary dividends of $1,480 on lines 2a and 2b because all of Fred's ordinary dividends are qualified dividends. They enter the amount of Fred's capital gain distributions, $420, on line 3. Next, they add the amounts on lines 1a, 2a, and 3 and enter the result, $1,900, on line 4.
They subtract the base amount on line 5, $1,800, from the amount on line 4, $1,900, and enter the result, $100, on line 6. This is the total amount from Form 8814 to be reported on their return. Next, they figure how much of this amount is qualified dividends and how much is capital gain distributions.
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They divide the amount on line 2b, $1,480, by the amount on line 4, $1,900. They enter the result, .779, on line 7.
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They divide the amount on line 3, $420, by the amount on line 4, $1,900. They enter the result, .221, on line 8.
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They multiply the amount on line 6, $100, by the decimal on line 7, .779, and enter the result, $78, on line 9.
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They multiply the amount on line 6, $100, by the decimal on line 8, .221, and enter the result, $22, on line 10.
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They include the amount from line 9, $78, on lines 9a and 9b of their Form 1040 and enter “Form 8814 – $78” on the dotted lines next to lines 9a and 9b. They include the amount from line 10, $22, on line 13 of their Schedule D (Form 1040) and enter “Form 8814 – $22” on the dotted line next to line 13 of Schedule D.
They enter $100 ($78 + $22) on line 11 and -0- ($100 – $100) on line 12. Because the amount on line 12 is -0-, they do not include any amount from Form 8814 on line 21 of their Form 1040.
Use Form 8814, Part II, to figure the tax on the $1,800 of your child's interest and dividends that you do not include in your income. This tax is added to the tax figured on your income.
This additional tax is the smaller of:
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10% x (your child's gross income − $900), or
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$90.
Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44, or Form 1040NR, line 41. Check box a on Form 1040, line 44, or Form 1040NR, line 41.
David and Linda Parks are married and will file separate tax returns for 2008. Their only child, Philip, is 8. Philip received a Form 1099-INT showing $1,650 taxable interest income and a Form 1099-DIV showing $1,150 ordinary dividends. All the dividends were qualified dividends. His parents decide to include that income on one of their returns so they will not have to file a return for Philip.
First, David and Linda each figure their taxable income (Form 1040, line 43) without regard to Philip's income. David's taxable income is $56,700 and Linda's is $74,300. Because her taxable income is greater, Linda can elect to include Philip's income on her return. (See Which Parent's Return To Use, earlier.)
On Form 8814 (illustrated on the next page), Linda enters her name and social security number, then Philip's name and social security number. She enters Philip's taxable interest income, $1,650, on line 1a. Philip had no tax-exempt interest income, so she leaves line 1b blank. Linda enters Philip's ordinary dividends, $1,150, on line 2a. All of Philip's ordinary dividends were qualified dividends, so Linda also enters $1,150 on line 2b. Philip did not have any capital gain distributions, so she leaves line 3 blank.
Linda adds lines 1a and 2a and enters the result, $2,800, on line 4. Because Philip had qualified dividends, Linda must complete lines 7 through 11 of Form 8814. She includes the amount from line 9 of Form 8814 ($411) on lines 9a and 9b of her Form 1040. On the dotted lines next to lines 9a and 9b, she enters “Form 8814–$411.”
Linda includes $589 in the total on line 21 of her Form 1040 (not illustrated) and in the space next to that line writes “Form 8814–$589.” Adding that amount, plus the $411 of qualified dividends, to her income increases each of the amounts on lines 22, 37, 38, 41, and 43 of her Form 1040 by $1,000. Linda is not claiming any deductions that are affected by the increase to her income. Therefore, her revised taxable income on line 43 is $75,300 ($74,300 + $411 + $589).
On Form 8814, Linda subtracts the $900 shown on line 13 from the $2,800 on line 4 and enters the result, $1,900, on line 14. Because that amount is not less than $900, she enters $90 on line 15. This is the tax on the first $1,800 of Philip's income, which Linda did not have to add to her income. She must add this additional tax to the tax figured on her revised taxable income.
The tax on her $75,300 revised taxable income, figured using the Qualified Dividends and Capital Gain Tax Worksheet in the
Form 1040 instructions, is $15,399. She adds $90, and enters the $15,489 total on Form 1040, line 44, and checks box a.
Linda attaches Form 8814 to her Form 1040.
If a child's interest, dividends, and other investment income total more than $1,800, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. If the parent does not or cannot choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. Attach the completed form to the child's Form 1040, Form 1040A, or Form 1040NR.
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The child's investment income was more than $1,800.
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The child is required to file a return for 2008.
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The child either:
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Was under age 18 at the end of the year,
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Was age 18 at the end of the year and did not have earned income that was more than half of his or her support, or
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Was a full-time student over age 18 and under age 24 at the end of the year and did not have earned income that was more than half of his or her support.
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At least one of the child's parents was alive at the end of 2008.
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The child does not file a joint return for 2008.
IF a child was born on | THEN, at the end of 2008, the child is considered to be |
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January 1, 1991 | 18* |
January 1, 1990 | 19** |
January 1, 1985 | 24*** |
*This child is not under age 18. The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. **This child meets condition 3 only if the child was a full-time student who did not have earned income that was more than half of the child's support. ***Do not use Form 8615 for this child. |
On Form 8615, lines A and B, enter the parent's name and social security number. (If the parents filed a joint return, enter the name and social security number listed first on the joint return.) On line C, check the box for the parent's filing status.
See Which Parent's Return To Use, earlier, for information on which parent's return information must be used on Form 8615.
Example.
Kimberly must use her mother's tax and taxable income to complete her Form 8615 for calendar year 2008 (January 1 – December 31). Kimberly's mother files her tax return on a fiscal year basis (July 1 – June 30). Kimberly must use the information on her mother's return for the tax year ending June 30, 2008, to complete her 2008 Form 8615.
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A statement that you are making the request to comply with section 1(g) of the Internal Revenue Code and that you have tried to get the information from the parent.
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Proof of the child's age (for example, a copy of the child's birth certificate).
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Evidence the child has more than $1,800 of unearned income (for example, a copy of the child's prior year tax return or copies of Forms 1099 for the current year).
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The name, address, social security number (if known), and filing status (if known) of the parent whose information is to be shown on Form 8615.
The first step in figuring a child's tax using Form 8615 is to figure the child's net investment income. To do that, use Form 8615, Part I. For an example, see the Illustrated Part I of Form 8615 on the next page.
If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. Adjusted gross income is shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 36. Form 1040EZ and Form 1040NR-EZ cannot be used if Form 8615 must be filed.
If the child had earned income, figure the amount to enter on Form 8615, line 1, by using the worksheet in the instructions for the form.
However, use the following worksheet if the child has excluded any foreign earned income, deducted a loss from self-employment, or has a net operating loss from another year.
Alternate Worksheet | ||
for Form 8615, Line 1 | ||
A. | Enter the amount from the child's Form 1040, line 22, or Form 1040NR, line 23 | |
B. | Enter the total of any net loss from self-employment, any net operating loss deduction, any foreign earned income exclusion, and any foreign housing exclusion from the child's Form 1040 or Form 1040NR. Enter this total as a positive number (greater than zero) |
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C. | Add line A and line B and enter the total. |
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D. | Enter the child's earned income plus any amount from the child's Form 1040, line 30, or the child's Form 1040NR, line 29. | |
Generally, the child's earned income is the total of the amounts reported on Form 1040, lines 7, 12, and 18 (if line 12 or 18 is a loss, use zero) or Form 1040NR, lines 8, 13, and 19 (if line 13 or 19 is a loss, use zero) | ||
E. | Subtract line D from line C. Enter the result here and on Form 8615, line 1 |
Example.
Amanda Black, age 13, received the following income.
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Dividends—$600
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Wages—$2,100
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Taxable interest—$1,200
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Tax-exempt interest—$100
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Capital gains—$300
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Capital losses—($200)
The dividends were qualified dividends on stock given to her by her grandparents.
Amanda's investment income is $1,900. This is the total of the dividends ($600), taxable interest ($1,200), and capital gains reduced by capital losses ($300 − $200 = $100). Her wages are earned (not investment) income because they are received for work actually done. Her tax-exempt interest is not included because it is nontaxable.
If the child does not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter $1,800 on line 2.
If the child does itemize deductions, enter on line 2 the larger of:
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$900 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29 (or Schedule A (Form 1040NR), line 17), that are directly connected with the production of the investment income entered on line 1, or
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$1,800.
Example 1.
Roger, age 12, has investment income of $8,000, no other income, no adjustments to income, and itemized deductions of $300 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with his investment income. His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. Line 2 is $1,800 because that is more than the sum of $900 and his directly-connected itemized deductions of $300.
Example 2.
Eleanor, age 8, has investment income of $16,000 and an early withdrawal penalty of $100. She has no other income. She has itemized deductions of $1,050 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with the production of her investment income. Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). The amount on line 2 is $1,950. This is the larger of:
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$900 plus the $1,050 of directly connected itemized deductions, or
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$1,800.
Subtract line 2 from line 1 and enter the result on this line. If zero or less, do not complete the rest of the form. However, you must still attach Form 8615 to the child's tax return. Figure the tax on the child's taxable income in the normal manner.
Enter on line 4 the child's taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 40.
A child's net investment income cannot be more than his or her taxable income. Enter on Form 8615, line 5, the smaller of line 3 or line 4. This is the child's net investment income.
If zero or less, do not complete the rest of the form. However, you must still attach Form 8615 to the child's tax return. Figure the tax on the child's taxable income in the normal manner.
The next step in completing Form 8615 is to figure a tentative tax on the child's net investment income at the parent's tax rate. The tentative tax at the parent's tax rate is the difference between the tax on the parent's taxable income figured with the child's net investment income (plus the net investment income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it.
When figuring the tentative tax at the parent's tax rate, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net investment income. For example, do not refigure the medical expense deduction.
Figure the tentative tax on lines 6 through 13. For an example, see the Illustrated Part II of Form 8615.
Enter on line 6 the amount from the parent's Form 1040, line 43; Form 1040A, line 27; Form 1040EZ, line 6; Form 1040NR, line 40; or Form 1040NR-EZ, line 14. If the parent's taxable income is zero or less, enter zero on line 6.
If the tax return information of the parent is also used on any other child's Form 8615, enter on line 7 the total of the amounts from line 5 of all the other children's Forms 8615. Do not include the amount from line 5 of the Form 8615 being completed.
Example.
Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. The children's net investment income amounts on line 5 of their Forms 8615 are:
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Sharon—$800
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Jerry—$600
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Mike—$1,000
Line 7 of Sharon's Form 8615 will show $1,600, the total of the amounts on line 5 of Jerry's and Mike's Forms 8615.
Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000).
Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600).
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 of Form 8615.
Figure the tax on the amount on line 8 using the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet (in the Form 1040, 1040A, or 1040NR instructions), the Schedule D Tax Worksheet (in the Schedule D instructions), or Schedule J (Form 1040), as follows.
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If line 8 does not include any net capital gain or qualified dividends, use the Tax Table or Tax Computation Worksheet to figure this tax. But if Schedule J, Income Averaging for Farmers and Fishermen, is used to figure the tax on the parent's return, use it to figure this tax.
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If line 8 does include any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. For details, see the instructions for Form 8615, line 9. However, if the child, parent, or any other child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. But if Schedule J is used to figure the tax on the parent's return, use it to figure this tax.
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On line 1, enter the amount from Form 8615, line 8.
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On line 2, enter the qualified dividends included on Form 8615, line 8. (See the earlier discussion for line 8.)
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On line 3, enter 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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On line 4, enter the total of the amounts, if any, on line 4e of all Forms 4952 filed by the child, parent, or any other child. If applicable, include instead the smaller amount entered on the dotted line next to line 4e.
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On lines 5 and 6, follow the worksheet instructions.
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On line 7, enter the net capital gain included on Form 8615, line 8. (See the earlier discussion for line 8.)
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On lines 8 through 10, follow the worksheet instructions.
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On line 11, enter zero if neither the child, parent, nor any other child has unrecaptured section 1250 gain (Schedule D, line 19) or 28% rate gain (Schedule D, line 18). Otherwise, enter the amount of unrecaptured section 1250 gain and 28% rate gain included in the net capital gain on line 8 of Form 8615. Figure these amounts as explained later under Figuring unrecaptured section 1250 gain (line 11) and Figuring 28% rate gain (line 11).
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If the Foreign Earned Income Tax Worksheet was used to figure the parent's tax or the tax of any child, go to step 10 below. Otherwise, skip steps 10, 11, and 12 below, and go to step 13.
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Determine whether there is a line 8 capital gain excess as follows.
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Add the amounts on line 2 of all Foreign Earned Income Tax Worksheets completed by the parent or any child for whom Form 8615 is filed. (But for each child do not add more than the excess, if any, of the amount on line 5 of the child's Form 8615 over the child's taxable income on Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 40.)
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Subtract (a) from the amount on line 1 of this Schedule D Tax Worksheet.
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Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. 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 12 below and go to step 13.
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If there is a line 8 capital gain excess, complete a second Schedule D Tax Worksheet as instructed above and in step 13 below but in its entirety and with the following additional modifications. (These modifications are to be made only for purposes of filling out this Schedule D Tax Worksheet.)
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Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 8 capital gain excess.
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Reduce the amount you would otherwise enter on line 6 (but not below zero) by any of the line 8 capital gain excess not used in (a) above.
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If the child, parent, or any other child has 28% rate gain, reduce the amount you would otherwise enter on line 8 of Worksheet 1 for Line 11 of the Schedule D Tax Worksheet – 28% Rate Gain (Line 9 Tax), shown later, (but not below zero) by the line 8 capital gain excess, and refigure the amount on line 11 of this Schedule D Tax Worksheet.
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If the child, parent, or any other child has unrecaptured section 1250 gain, reduce the amount you would otherwise enter on line 8 of Worksheet 2 for Line 11 of the Schedule D Tax Worksheet – Unrecaptured Section 1250 Gain (Line 9 Tax) (but not below zero) by the line 8 capital gain excess not used in (c) above, and refigure the amount on line 11 of this Schedule D Tax Worksheet.
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Complete lines 12 through 36 following the worksheet instructions. Use the parent's filing status to complete lines 15, 33, and 35.
Worksheet 1 for Line 11 of the Schedule D Tax Worksheet – 28% Rate Gain (Line 9 Tax) |
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1. | Enter the amount, if any, from the child's Schedule D, line 18. | |
If line 1 is zero or blank, skip lines 2 through 4, enter -0- on line 5, and go to line 6. | ||
2. | Enter the amount from the last line of the child's completed Line 5 Worksheet in the instructions for Form 8615, line 8 |
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3. | Enter the amount from line 2 of the child's completed Line 5 Worksheet |
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4. | Divide line 2 by line 3. Enter the result as a decimal |
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5. | Multiply line 1 by line 4 | |
6. | If no other child has 28% rate gain, enter -0-. Otherwise, repeat lines 1 through 5 above for each other child who has 28% rate gain and enter the total of the line 5 amounts for those other children |
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7. | Enter the amount, if any, from line 18 of the parent's Schedule D. | |
8. | Add lines 5, 6, and 7. Also include this amount on the Schedule D Tax Worksheet, line 11. |
Worksheet 2 for Line 11 of the Schedule D Tax Worksheet – Unrecaptured Section 1250 Gain (Line 9 Tax) |
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1. | Enter the amount, if any, from the child's Schedule D, line 19. | |
If line 1 is zero or blank, skip lines 2 through 4, enter -0- on line 5, and go to line 6. |
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2. | Enter the amount, if any, from the last line of the child's completed Line 5 Worksheet in the instructions for Form 8615, line 8 |
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3. | Enter the amount from line 2 of the child's completed Line 5 Worksheet | |
4. | Divide line 2 by line 3. Enter the result as a decimal |
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5. | Multiply line 1 by line 4 | |
6. | If no other child has unrecaptured section 1250 gain, enter -0-. Otherwise, repeat lines 1 through 5 for each other child who has unrecaptured section 1250 gain and enter the total of the line 5 amounts for those children | |
7. | Enter the amount, if any, from line 19 of the parent's Schedule D | |
8. | Add lines 5, 6, and 7. Also include this amount on the Schedule D Tax Worksheet, line 11. |
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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 from the parent's Schedule J, line 2.
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Complete line 3 following the Schedule J instructions.
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Complete line 4. If Form 8615, line 8, includes any net capital gain, use the Qualified Dividends and Capital Gain Tax Worksheet to figure the tax amount on this line. For details on how to use the worksheet, see the instructions for Form 8615, line 9, but use the amount on line 3 of this worksheet Schedule J (instead of the amount on Form 8615, line 8) in step (1) of Using the Qualified Dividends and Capital Gain Tax Worksheet for line 9 tax. However, if the child, parent, or any other child has 28% rate gain, or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. Follow the earlier instructions under Using the Schedule D Tax Worksheet for line 9 tax, except use the amount on line 3 of this worksheet Schedule J (instead of the amount on Form 8615, line 8) in step (1).
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On lines 5 through 16, enter the amounts from the parent's Schedule J, lines 5 through 16.
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Complete line 17 following the Schedule J instructions.
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On lines 18 through 21, enter the amounts from the parent's Schedule J, lines 18 through 21.
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Complete line 22 following the Schedule J instructions.
Enter on line 10 the amount from the parent's Form 1040, line 44; Form 1040A, line 28 (minus any alternative minimum tax); Form 1040EZ, line 11; Form 1040NR, line 41; or Form 1040NR-EZ, line 15. Do not include the tax, if any, from Form 4972 or Form 8814 or any tax from recapture of an education credit.
If the parent files Form 2555 or 2555-EZ, 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.
Subtract line 10 from line 9 and enter the result on this line. This is the tentative tax.
If line 7 is blank, skip lines 12a and 12b and enter the amount from line 11 on line 13. Also skip the discussion for lines 12a and 12b that follows.
If an amount is entered on line 7, divide the tentative tax shown on line 11 among the children according to each child's share of the total net investment income. This is done on lines 12a, 12b, and 13. Add the amount on line 7 to the amount on line 5 and enter the total on line 12a. Divide the amount on line 5 by the amount on line 12a and enter the result, as a decimal, on line 12b.
Example.
In the earlier example under Line 7 (Net Investment Income of Other Children), Sharon's Form 8615 shows $1,600 on line 7. The amount entered on line 12a is $2,400, the total of the amounts on lines 5 and
7 ($800 + $1,600). The decimal on line 12b is .333, figured as follows and rounded to three places.
$800 | = | .333 | |
$2,400 |
The final step in figuring a child's tax using Form 8615 is to determine the larger of:
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The total of:
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The child's share of the tentative tax based on the parent's tax rate, plus
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The tax on the child's taxable income in excess of net investment income, figured at the child's tax rate, or
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The tax on the child's taxable income, figured at the child's tax rate.
This is the child's tax. It is figured on Form 8615, lines 14 through 18.
If lines 4 and 5 of Form 8615 are the same, the child's taxable income is not more than the child's net investment income. Enter zero on lines 14 and 15, and go to line 16. Also skip the rest of this discussion and the discussion for line 15 that follows.
If lines 4 and 5 are not the same, subtract line 5 from line 4 and enter the result on line 14. Then, before completing line 15, you must determine the amount of net capital gain and qualified dividends, if any, included on line 14.
Figure the tax on the amount on line 14 using the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet, the Schedule D Tax Worksheet, or Schedule J (Form 1040), as follows.
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If line 14 does not include any net capital gain or qualified dividends, use the Tax Table or Tax Computation Worksheet (or Schedule J, if applicable) to figure this tax.
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If line 14 does include any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. For details, see the instructions for Form 8615, line 15. However, if the child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. (But use Schedule J instead, if it applies.)
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On line 1, enter the amount from Form 8615, line 14.
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On line 2, enter the qualified dividends included on Form 8615, line 14. (See the earlier discussion for line 14.)
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Leave lines 3 through 5 blank.
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Enter the amount from line 2 on line 6.
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On line 7, enter the net capital gain included on Form 8615, line 14. (See the earlier discussion for line 14.)
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Skip line 8.
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Enter the amount from line 7 on line 9.
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Complete line 10, following the worksheet instructions.
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On line 11, enter zero if the child has no 28% rate gain (Schedule D, line 18) or unrecaptured section 1250 gain (Schedule D, line 19). Otherwise, see Worksheet 1 for Line 11 of the Schedule D Tax Worksheet – 28% Rate Gain (Line 9 Tax) and Worksheet 2 for Line 11 of the Schedule D Tax Worksheet – Unrecaptured Section 1250 Gain (Line 9 Tax) under Using the Schedule D Tax Worksheet for line 9 tax, earlier. For each worksheet you complete, subtract line 5 of that worksheet from line 1 of that worksheet, and include the result on line 11 of this worksheet.
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If the child is not filing Form 2555 or 2555-EZ, skip steps 11, 12, and 13 below, and go to step 14. If the child is filing Form 2555 or 2555-EZ, go to step 11.
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Determine whether there is a line 14 capital gain excess as follows.
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Subtract from line 2 of the child's Foreign Earned Income Tax Worksheet the excess, if any, of the amount on line 5 of the child's Form 8615 over the child's taxable income on Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 40.
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Subtract (a) from the amount on line 14 of Form 8615.
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Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. If the result is more than zero, that amount is the line 14 capital gain excess. If the result is zero or less, there is no line 14 capital gain excess.
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If there is no line 14 capital gain excess, skip step 13 below and go to step 14.
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If there is a line 14 capital gain excess, complete a second Schedule D Tax Worksheet as instructed above and in step 14 below but in its entirety and with the following additional modifications. (These modifications are to be made only for purposes of filling out this Schedule D Tax Worksheet.)
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Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 14 capital gain excess.
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Reduce the amount you would otherwise enter on line 6 (but not below zero) by any of the line 14 capital gain excess not used in (a) above.
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If the child has 28% rate gain, reduce the amount you would otherwise enter on line 11, as figured in step 9, (but not below zero) by the line 14 capital gain excess.
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If the child has unrecaptured section 1250 gain, reduce the amount you would otherwise enter on line 11, as figured in step 9, (but not below zero) by the line 14 capital gain excess not used in (c) above.
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Complete lines 12 through 36 following the worksheet instructions. Use the child's filing status to complete lines 15, 33, and 35.
Add lines 13 and 15 and enter the total on line 16. This is the child's tax figured at the parent's rate on net investment income and the child's rate on other income.
Figure the tax on the amount on line 4. Use the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet, the Schedule D Tax Worksheet, or the child's actual Schedule J, whichever applies. Enter the tax amount on line 17. If it is from the Qualified Dividends and Capital Gain Tax Worksheet, the Schedule D Tax Worksheet, or Schedule J, check the box on that line.
Enter on line 18 the larger of line 16 or line 17. Also enter this amount on the child's Form 1040, line 44; Form 1040A, line 28; or Form 1040NR, line 41. This is the child's tax.
A child may be subject to alternative minimum tax (AMT) if he or she has certain items given preferential treatment under the tax law. These items include accelerated depreciation and certain tax-exempt interest income. The AMT may also apply if the child has passive activity losses or certain distributions from estates or trusts.
For more information on who is liable for AMT and how to figure it, see Form 6251.
This example shows how to fill out Forms 8615 and 1040A for Sara Brown. It also shows how to use the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040A instructions to figure Sara's tax.
John and Laura Brown have one child, Sara. She is 13 and has $1,050 taxable interest, $1,050 qualified dividend income, $700 capital gain distributions, and $1,550 earned income. She does not itemize deductions. John and Laura file a joint return with John's name and social security number listed first. They claim three exemptions, including an exemption for Sara, on their return.
Because she is under age 18 and has more than $1,800 investment income, part of her income may be subject to tax at her parents' rate. A completed Form 8615 must be attached to her return.
Sara's father, John, fills out Sara's return. He completes her Form 1040A through line 27, then begins completing her Form 8615.
John enters his name and social security number on Sara's Form 8615 because his name and number are listed first on the joint return he and Laura are filing. He checks the box for married filing jointly.
He enters Sara's investment income, $2,800, on line 1. Sara does not itemize deductions, so John enters $1,800 on line 2. He enters $1,000 ($2,800 − $1,800) on line 3.
Sara's taxable income, as shown on her Form 1040A, line 27, is $2,500. This is her total income ($4,350) minus her standard deduction ($1,850). Her standard deduction is limited to the amount of her earned income plus $300. John enters $2,500 on line 4.
John compares lines 3 and 4 and enters the smaller amount, $1,000, on line 5.
John enters $48,000 on line 6. This is the taxable income from line 43 of John and Laura's joint Form 1040 return. Sara is an only child, so line 7 is blank. He adds line 5 ($1,000), line 6 ($48,000), and line 7 (blank) and enters $49,000 on line 8.
Because Sara's capital gain distributions and qualified dividends are included on line 5, John uses Line 5 Worksheet #1 (in the instructions for Form 8615) to figure out that $250 net capital gain and $375 qualified dividends are included on line 5. He completes that worksheet as follows.
Line 5 Worksheet #1 | ||
1. | Enter the child's qualified dividends | $1,050 |
2. | Enter the child's net capital gain | 700 |
3. | Enter the amount from the child's Form 8615, line 1 | 2,800 |
4. | Divide line 1 by line 3. Enter the result as a decimal (rounded to at least 3 places). Do not enter more than 1.000 | .375 |
5. | Divide line 2 by line 3. Enter the result as a decimal (rounded to at least 3 places). Do not enter more than 1.000 | .250 |
6. | Multiply $1,800 by line 4 | 675 |
7. | Multiply $1,800 by line 5 | 450 |
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) | 375 |
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) | 250 |
Sara's parents do not have a net capital gain or any qualified dividends, so no net capital gain or qualified dividends are on line 6 of Sara's Form 8615. Therefore, the amount of net capital gain on line 8 of Sara's Form 8615 is $250, and the amount of qualified dividends on that line is $375. John uses the Qualified Dividends and Capital Gain Tax Worksheet (in the Form 1040A instructions) and follows the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 9 tax in the Form 8615 instructions to figure the tax to enter on Sara's Form 8615, line 9.
John enters $375 on line 2 of the Qualified Dividends and Capital Gain Tax Worksheet, and $250 on line 3 of that worksheet. That completed worksheet is shown later as Filled-in Qualified Dividends and Capital Gain Tax Worksheet #1. John enters the tax of $6,454 on Sara's Form 8615, line 9.
He enters the tax from his and Laura's Form 1040 ($6,401) on Sara's Form 8615, line 10, then subtracts that amount from the $6,454 on line 9, and enters the $53 remainder on line 11. Because line 7 is blank, John skips lines 12a and 12b and enters $53 on line 13.
John subtracts line 5 ($1,000) from line 4 ($2,500) and enters the result, $1,500, on line 14. Using the instructions for line 14 earlier, John subtracts the net capital gain included on line 5 ($250) from Sara's net capital gain ($700) to figure the $450 net capital gain included on line 14. He also subtracts the qualified dividends included on line 5 ($375) from Sara's qualified dividends ($1,050) to figure the $675 qualified dividends included on line 14. He uses another Qualified Dividends and Capital Gain Tax Worksheet and follows the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 15 tax, in the Form 8615 instructions, to figure the $39 tax to enter on Form 8615, line 15. That completed worksheet is shown later as Filled-in Qualified Dividends and Capital Gain Tax Worksheet #2.
John adds lines 13 and 15 of Form 8615, and enters the sum, $92, on line 16. Then he uses another Qualified Dividends and Capital Gain Tax Worksheet to figure the $76 tax on Sara's $2,500 taxable income to enter on Form 8615, line 17. That completed worksheet is shown later as Filled-in Qualified Dividends and Capital Gain Tax Worksheet #3.
Finally, John compares lines 16 and 17 and enters the larger amount, $92, on line 18 of Sara's Form 8615. He also enters that amount on Sara's Form 1040A, line 28.
John also completes Schedule 1, Form 1040A (not shown) for Sara.
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