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For children under age 18 and certain older children described below in Who Must File, unearned income over $2,100 is taxed at the parent's rate if the parent's rate is higher than the child's. If the child's unearned income is more than $2,100, use Form 8615 to figure the child's tax.
For Form 8615, “unearned income” includes all taxable income other than earned income as defined later. Unearned income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, etc. It also includes taxable social security benefits, pension and annuity income, taxable scholarship and fellowship grants not reported on Form W-2, unemployment compensation, alimony, and income (other than earned income) received as the beneficiary of a trust.
Form 8615 must be filed for any child who meets all of the following conditions.
The child had more than $2,100 of unearned income.
The child is required to file a tax return.
The child either:
Was under age 18 at the end of 2015,
Was age 18 at the end of 2015 and did not have earned income that was more than half of the child's support, or
Was a full-time student at least age 19 and under age 24 at the end of 2015 and did not have earned income that was more than half of the child's support.
(Earned income is defined later. Support is defined below.)
At least one of the child's parents was alive at the end of 2015.
The child does not file a joint return for 2015.
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 was born on...||THEN, at the end of 2015, the child is considered to be...|
|January 1, 1998||18*|
|January 1, 1997||19**|
|January 1, 1992||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.
If the parent's taxable income, filing status, or the net unearned income of the parent's other children is not known by the due date of the child's return, reasonable estimates can be used. Enter “Estimated” next to the appropriate line(s) of Form 8615. When the correct information is available, file Form 1040X, Amended U.S. Individual Income Tax Return.
Instead of using estimates, the child can get an automatic 6-month extension of time to file. For details, see Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
If the parent’s income changes after the child’s return is filed, the tax must be refigured using the adjusted amounts. The child’s tax must also be refigured if there are changes to the net unearned income of other children for whom the parent is required to file a Form 8615. If the child's tax changes, file Form 1040X to correct the child's tax.
A child whose tax is figured on Form 8615 may owe the alternative minimum tax. For details, see Form 6251, Alternative Minimum Tax—Individuals, and its instructions.
A child whose tax is figured on Form 8615 may be subject to the Net Investment Income Tax (NIIT). NIIT is a 3.8% tax on the lesser of net investment income or the excess of the child's modified adjusted gross income (MAGI) over the threshold amount. UseForm 8960, Net Investment Income Tax, to figure this tax. For more information on NIIT, go to www.irs.gov and enter “Net Investment Income Tax” in the search box.
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