Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

2012 Freetaxusa

State Tax Return OnlineState Tax Filing RequirementsIrs Amended Return1040 Ez Form1040x Instructions DummiesTurbotax 2011Filing TaxesFile Amended Tax ReturnFree Efile1040ez Mailing AddressFree State Tax Only E FilingIncome Tax Filing OnlineHow Do I File 2009 Taxes Online1040x TurbotaxFederal Amended Tax FormsFree File State Return OnlyTax 1040nr2014 State Tax Forms10ez1040ez Online Filing FreeFree Federal And State Tax Filing1040 EsFile Free 1040ezHow Do I Amend My 2013 Tax ReturnWww Myfreetaxes Com UpstreetfreetaxFile Taxes Online For FreeEz Form 2012Irs Forms 1040ezFree Tax Preparation SoftwareHow To Do Amended Tax Return1040ez Form OnlineIncome Tax ExtentionAmend 1040Freetax UsaFiling 2012 Tax Return LateOnline 1040nrFree Tax Form 1040ezH And R Block 1040ezHrblockfreefileFiling Taxes For 2012

2012 Freetaxusa

2012 freetaxusa Publication 334 - Introductory Material Table of Contents IntroductionOrdering forms and publications. 2012 freetaxusa Tax questions. 2012 freetaxusa Future Developments What's New for 2013 What's New for 2014 Reminders Photographs of Missing Children Introduction The purpose of this publication is to provide general information about the federal tax laws that apply to small business owners who are sole proprietors and to statutory employees. 2012 freetaxusa This publication has information on business income, expenses, and tax credits that may help you file your income tax return. 2012 freetaxusa Are you self-employed?   You are self-employed if you carry on a trade or business as a sole proprietor or an independent contractor. 2012 freetaxusa Sole proprietor. 2012 freetaxusa   A sole proprietor is someone who owns an unincorporated business by himself or herself. 2012 freetaxusa However, if you are the sole member of a domestic limited liability company (LLC), you are not a sole proprietor if you elect to treat the LLC as a corporation. 2012 freetaxusa Trade or business. 2012 freetaxusa    A trade or business is generally an activity carried on to make a profit. 2012 freetaxusa The facts and circumstances of each case determine whether or not an activity is a trade or business. 2012 freetaxusa You do not need to actually make a profit to be in a trade or business as long as you have a profit motive. 2012 freetaxusa You do need to make ongoing efforts to further the interests of your business. 2012 freetaxusa   You do not have to carry on regular full-time business activities to be self-employed. 2012 freetaxusa Having a part-time business in addition to your regular job or business may be self-employment. 2012 freetaxusa Independent contractor. 2012 freetaxusa    People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. 2012 freetaxusa However, whether they are independent contractors or employees depends on the facts in each case. 2012 freetaxusa The general rule is that an individual is an independent contractor if the payer has the right to control or to direct only the result of the work and not how it will be done. 2012 freetaxusa The earnings of a person who is working as an independent contractor are subject to self-employment tax. 2012 freetaxusa For more information on determining whether you are an employee or independent contractor, see Publication 15-A, Employer's Supplemental Tax Guide. 2012 freetaxusa Statutory employee. 2012 freetaxusa   A statutory employee has a checkmark in box 13 of his or her Form W-2, Wage and Tax Statement. 2012 freetaxusa Statutory employees use Schedule C or C-EZ to report their wages and expenses. 2012 freetaxusa Limited liability company (LLC). 2012 freetaxusa   A limited liability company (LLC) is an entity formed under state law by filing articles of organization. 2012 freetaxusa Generally, a single-member LLC is disregarded as an entity separate from its owner and reports its income and deductions on its owner's federal income tax return. 2012 freetaxusa An owner who is an individual may use Schedule C or C-EZ. 2012 freetaxusa Business owned and operated by spouses. 2012 freetaxusa   If you and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. 2012 freetaxusa Do not use Schedule C or C-EZ. 2012 freetaxusa Instead, file Form 1065, U. 2012 freetaxusa S. 2012 freetaxusa Return of Partnership Income. 2012 freetaxusa For more information, see Publication 541, Partnerships. 2012 freetaxusa    Exception—Community income. 2012 freetaxusa If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. 2012 freetaxusa S. 2012 freetaxusa possession, you can treat the business either as a sole proprietorship or a partnership. 2012 freetaxusa The only states with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 2012 freetaxusa A change in your reporting position will be treated as a conversion of the entity. 2012 freetaxusa    Exception—Qualified joint venture. 2012 freetaxusa If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. 2012 freetaxusa Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. 2012 freetaxusa For an explanation of "material participation," see the Instructions for Schedule C, line G. 2012 freetaxusa   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. 2012 freetaxusa Each of you must file a separate Schedule C or C-EZ and a separate Schedule SE. 2012 freetaxusa For more information, see Qualified Joint Ventures in the Instructions for Schedule SE. 2012 freetaxusa This publication does not cover the topics listed in the following table. 2012 freetaxusa    IF you need information about: THEN you should see: Corporations Publication 542 Farming Publication 225 Fishermen (Capital Construction Fund)  Publication 595 Partnerships Publication 541 Passive activities Publication 925 Recordkeeping Publication 583 Rental Publication 527 S corporations Instructions for Form 1120S What you need to know. 2012 freetaxusa   Table A provides a list of questions you need to answer to help you meet your federal tax obligations. 2012 freetaxusa After each question is the location in this publication where you will find the related discussion. 2012 freetaxusa Table A. 2012 freetaxusa What You Need To Know About Federal Taxes (Note. 2012 freetaxusa The following is a list of questions you may need to answer so you can fill out your federal income tax return. 2012 freetaxusa Chapters are given to help you find the related discussion in this publication. 2012 freetaxusa ) What must I know   Where to find the answer   What kinds of federal taxes do I have to pay? How do I pay them?   See chapter 1. 2012 freetaxusa What forms must I file?   See chapter 1. 2012 freetaxusa What must I do if I have employees?   See Employment Taxes in chapter 1. 2012 freetaxusa Do I have to start my tax year in January, or can I start it in any other month?   See Accounting Periods in chapter 2. 2012 freetaxusa What method can I use to account for my income and expenses?   See Accounting Methods in chapter 2. 2012 freetaxusa What kinds of business income do I have to report on my tax return?   See chapter 5. 2012 freetaxusa What kinds of business expenses can I deduct on my tax return?   See Business Expenses in chapter 8. 2012 freetaxusa What kinds of expenses are not deductible as business expenses?   See Expenses You Cannot Deduct in chapter 8. 2012 freetaxusa What happens if I have a business loss? Can I deduct it?   See chapter 9. 2012 freetaxusa What must I do if I disposed of business property during the year?   See chapter 3. 2012 freetaxusa What are my rights as a taxpayer?   See chapter 11. 2012 freetaxusa Where do I go if I need help with federal tax matters?   See chapter 12. 2012 freetaxusa IRS mission. 2012 freetaxusa   Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. 2012 freetaxusa Comments and suggestions. 2012 freetaxusa   We welcome your comments about this publication and your suggestions for future editions. 2012 freetaxusa   You can write to us at the following address:  Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 2012 freetaxusa NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2012 freetaxusa Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2012 freetaxusa   You can send your comments from www. 2012 freetaxusa irs. 2012 freetaxusa gov/formspubs/. 2012 freetaxusa Click on “More Information” then on “Comment on Tax Forms and Publications. 2012 freetaxusa ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. 2012 freetaxusa Ordering forms and publications. 2012 freetaxusa   Visit  www. 2012 freetaxusa irs. 2012 freetaxusa gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. 2012 freetaxusa  Internal Revenue Service 1201 N. 2012 freetaxusa Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 2012 freetaxusa   If you have a tax question, check the information available on IRS. 2012 freetaxusa gov or call 1-800-829-1040. 2012 freetaxusa We cannot answer tax questions sent to either of the above addresses. 2012 freetaxusa Future Developments For the latest information about developments related to Publication 334, such as legislation enacted after it was published, go to www. 2012 freetaxusa irs. 2012 freetaxusa gov/pub334. 2012 freetaxusa What's New for 2013 The following are some of the tax changes for 2013. 2012 freetaxusa For information on other changes, go to IRS. 2012 freetaxusa gov. 2012 freetaxusa Tax rates. 2012 freetaxusa . 2012 freetaxusa  For tax years beginning in 2013, the social security part of the self-employment tax increases to 12. 2012 freetaxusa 4%. 2012 freetaxusa The Medicare part of the tax remains at 2. 2012 freetaxusa 9%. 2012 freetaxusa As a result, the self-employment tax is 15. 2012 freetaxusa 3%. 2012 freetaxusa Maximum net earnings. 2012 freetaxusa  The maximum net self-employment earnings subject to the social security part of the self-employment tax increases to $113,700 for 2013. 2012 freetaxusa There is no maximum limit on earnings subject to the Medicare part. 2012 freetaxusa Standard mileage rate. 2012 freetaxusa  For 2013, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for each mile of business use is 56. 2012 freetaxusa 5 cents per mile. 2012 freetaxusa For more information, see Car and Truck Expenses in chapter 8. 2012 freetaxusa Simplified method for business use of home deduction. 2012 freetaxusa . 2012 freetaxusa  The IRS now provides a simplified method to determine your expenses for business use of your home. 2012 freetaxusa For more information, see Business Use of Your Home in chapter 8. 2012 freetaxusa What's New for 2014 The following are some of the tax changes for 2014. 2012 freetaxusa For information on other changes, go to IRS. 2012 freetaxusa gov. 2012 freetaxusa Standard mileage rate. 2012 freetaxusa  For 2014, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for each mile of business use is 56 cents per mile. 2012 freetaxusa Self-employment tax. 2012 freetaxusa  The maximum net self-employment earnings subject to the social security part of the self-employment tax is $117,000 for 2014. 2012 freetaxusa Reminders Accounting methods. 2012 freetaxusa  Certain small business taxpayers may be eligible to adopt or change to the cash method of accounting and may not be required to account for inventories. 2012 freetaxusa For more information, see Inventories in chapter 2. 2012 freetaxusa Reportable transactions. 2012 freetaxusa  You must file Form 8886, Reportable Transaction Disclosure Statement, to report certain transactions. 2012 freetaxusa You may have to pay a penalty if you are required to file Form 8886 but do not do so. 2012 freetaxusa You may also have to pay interest and penalties on any reportable transaction understatements. 2012 freetaxusa Reportable transactions include: Transactions the same as or substantially similar to tax avoidance transactions identified by the IRS, Transactions offered to you under conditions of confidentiality for which you paid an advisor a minimum fee, Transactions for which you have, or a related party has, contractual protection against disallowance of the tax benefits, Transactions that result in losses of at least $2 million in any single tax year ($50,000 if from certain foreign currency transactions) or $4 million in any combination of tax years, and Transactions the same or substantially similar to one of the types of transactions the IRS has identified as a transaction of interest. 2012 freetaxusa For more information, see the Instructions for Form 8886. 2012 freetaxusa Photographs of Missing Children The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 2012 freetaxusa Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 2012 freetaxusa You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 2012 freetaxusa Prev  Up  Next   Home   More Online Publications
Español

Science and Technology News, Reference, and Portals

Find science and technology references, databases, RSS feeds, podcasts, journals, reports, and more.

The 2012 Freetaxusa

2012 freetaxusa 31. 2012 freetaxusa   Tax on Unearned Income of Certain Children Table of Contents What's New Introduction Useful Items - You may want to see: Which Parent's Return To UseParents Who Do Not File a Joint Return Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, lines A–C) Step 1. 2012 freetaxusa Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. 2012 freetaxusa Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. 2012 freetaxusa Figuring the Child's Tax (Form 8615, Part III) What's New Net Investment Income Tax. 2012 freetaxusa . 2012 freetaxusa  For tax years beginning after December 31, 2012, a child whose tax is figured on Form 8615 may be subject to the Net Investment Income Tax (NIIT). 2012 freetaxusa NIIT is a 3. 2012 freetaxusa 8% tax on the lesser of the net investment income or the excess of the child's modified adjusted gross income (MAGI) over the threshold amount. 2012 freetaxusa Use Form 8960, Net Investment Income Tax, to figure this tax. 2012 freetaxusa For more information on NIIT, go to www. 2012 freetaxusa irs. 2012 freetaxusa gov and enter “Net Investment Income Tax” in the search box. 2012 freetaxusa Introduction This chapter discusses the following two rules that may affect the tax on unearned income of certain children. 2012 freetaxusa If the child's interest and dividend income (including capital gain distributions) total less than $10,000, 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. 2012 freetaxusa (See Parent's Election To Report Child's Interest and Dividends , later. 2012 freetaxusa ) If the child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. 2012 freetaxusa (See Tax for Certain Children Who Have Unearned Income , later. 2012 freetaxusa ) For these rules, the term “child” includes a legally adopted child and a stepchild. 2012 freetaxusa These rules apply whether or not the child is a dependent. 2012 freetaxusa Useful Items - You may want to see: Publication 929 Tax Rules for Children and Dependents Form (and Instructions) 8615 Tax for Certain Children Who Have Unearned Income 8814 Parents' Election To Report Child's Interest and Dividends Which Parent's Return To Use 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 unearned income. 2012 freetaxusa 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 Unearned Income . 2012 freetaxusa Parents Who Do Not File a Joint Return 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. 2012 freetaxusa Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . 2012 freetaxusa Parents are married. 2012 freetaxusa   If the child's parents file separate returns, use the return of the parent with the greater taxable income. 2012 freetaxusa Parents not living together. 2012 freetaxusa   If the child's parents are married to each other but not living together, and the parent with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. 2012 freetaxusa If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. 2012 freetaxusa   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in chapter 2. 2012 freetaxusa Parents are divorced. 2012 freetaxusa   If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the custodial parent) has not remarried, use the return of the custodial parent. 2012 freetaxusa Custodial parent remarried. 2012 freetaxusa   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. 2012 freetaxusa Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. 2012 freetaxusa Do not use the return of the noncustodial parent. 2012 freetaxusa   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. 2012 freetaxusa If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. 2012 freetaxusa Parents never married. 2012 freetaxusa   If a child's parents have never been married to each other, but lived together all year, use the return of the parent with the greater taxable income. 2012 freetaxusa If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. 2012 freetaxusa Widowed parent remarried. 2012 freetaxusa   If a widow or widower remarries, the new spouse is treated as the child's other parent. 2012 freetaxusa The rules explained earlier under Custodial parent remarried apply. 2012 freetaxusa 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. 2012 freetaxusa If you do, your child will not have to file a return. 2012 freetaxusa You can make this election only if all the following conditions are met. 2012 freetaxusa Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. 2012 freetaxusa Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). 2012 freetaxusa The child's gross income was less than $10,000. 2012 freetaxusa The child is required to file a return unless you make this election. 2012 freetaxusa The child does not file a joint return for the year. 2012 freetaxusa No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was applied to this year under your child's name and social security number. 2012 freetaxusa No federal income tax was taken out of your child's income under the backup withholding rules. 2012 freetaxusa You are the parent whose return must be used when applying the special tax rules for children. 2012 freetaxusa (See Which Parent's Return To Use , earlier. 2012 freetaxusa ) These conditions are also shown in Figure 31-A. 2012 freetaxusa Certain January 1 birthdays. 2012 freetaxusa   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. 2012 freetaxusa You cannot make this election for such a child unless the child was a full-time student. 2012 freetaxusa   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. 2012 freetaxusa You cannot make this election for such a child. 2012 freetaxusa Full-time student. 2012 freetaxusa   A full-time student is a child who during some part of each of any 5 calendar months of the year was enrolled as a full-time student at a school, or took a full-time on-farm training course given by a school or a state, county, or local government agency. 2012 freetaxusa A school includes a technical, trade, or mechanical school. 2012 freetaxusa It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. 2012 freetaxusa How to make the election. 2012 freetaxusa   Make the election by attaching Form 8814 to your Form 1040. 2012 freetaxusa (If you make this election, you cannot file Form 1040A or Form 1040EZ. 2012 freetaxusa ) Attach a separate Form 8814 for each child for whom you make the election. 2012 freetaxusa You can make the election for one or more children and not for others. 2012 freetaxusa Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. 2012 freetaxusa Rate may be higher. 2012 freetaxusa   If your child received qualified dividends or capital gain distributions, you may pay up to $100 more tax if you make this election instead of filing a separate tax return for the child. 2012 freetaxusa This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. 2012 freetaxusa However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions. 2012 freetaxusa Deductions you cannot take. 2012 freetaxusa   By making the Form 8814 election, you cannot take any of the following deductions that the child would be entitled to on his or her return. 2012 freetaxusa The additional standard deduction if the child is blind. 2012 freetaxusa The deduction for a penalty on an early withdrawal of your child's savings. 2012 freetaxusa Itemized deductions (such as your child's investment expenses or charitable contributions). 2012 freetaxusa Reduced deductions or credits. 2012 freetaxusa   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return including the following. 2012 freetaxusa Deduction for contributions to a traditional individual retirement arrangement (IRA). 2012 freetaxusa Deduction for student loan interest. 2012 freetaxusa Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. 2012 freetaxusa Credit for child and dependent care expenses. 2012 freetaxusa Child tax credit. 2012 freetaxusa Education tax credits. 2012 freetaxusa Earned income credit. 2012 freetaxusa Penalty for underpayment of estimated tax. 2012 freetaxusa   If you make this election for 2013 and did not have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to a penalty. 2012 freetaxusa If you plan to make this election for 2014, you may need to increase your federal income tax withholding or your estimated tax payments to avoid the penalty. 2012 freetaxusa See chapter 4 for more information. 2012 freetaxusa Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. 2012 freetaxusa Only the amount over $2,000 is added to your income. 2012 freetaxusa The amount over $2,000 is shown on Form 8814, line 6. 2012 freetaxusa Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. 2012 freetaxusa Include the amount from Form 8814, line 12, on Form 1040, line 21. 2012 freetaxusa Enter “Form 8814” on the dotted line next to line 21. 2012 freetaxusa If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040, line 21. 2012 freetaxusa Capital gain distributions and qualified dividends. 2012 freetaxusa   If your child's dividend income included any capital gain distributions, see Capital gain distributions under Figuring Child's Income in Publication 929, Part 2. 2012 freetaxusa If your child's dividend income included any qualified dividends, see Qualified dividends under Figuring Child's Income in Publication 929, Part 2. 2012 freetaxusa Figuring Additional Tax Use Form 8814, Part II, to figure the tax on the $2,000 of your child's interest and dividends that you do not include in your income. 2012 freetaxusa This tax is added to the tax figured on your income. 2012 freetaxusa This additional tax is the smaller of: 10% × (your child's gross income − $1,000), or $100. 2012 freetaxusa Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44. 2012 freetaxusa Check box a on Form 1040, line 44. 2012 freetaxusa Figure 31-A. 2012 freetaxusa Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. 2012 freetaxusa Figure 31–A. 2012 freetaxusa Can You Include Your Child's Income On Your Tax Return? Tax for Certain Children Who Have Unearned Income If a child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. 2012 freetaxusa 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. 2012 freetaxusa Attach the completed form to the child's Form 1040 or Form 1040A. 2012 freetaxusa When Form 8615 must be filed. 2012 freetaxusa   Form 8615 must be filed for a child if all of the following statements are true. 2012 freetaxusa The child's investment income was more than $2,000. 2012 freetaxusa The child is required to file a return for 2013. 2012 freetaxusa The child either: Was under age 18 at the end of the year, 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 Was over age 18 and under age 24 at the end of the year, was a full-time student, and did not have earned income that was more than half of his or her support. 2012 freetaxusa At least one of the child's parents was alive at the end of 2013. 2012 freetaxusa The child does not file a joint return for 2013. 2012 freetaxusa These conditions are also shown in  Figure 31-B. 2012 freetaxusa Earned income. 2012 freetaxusa   Earned income includes salaries, wages, tips, and other payments received for personal services performed. 2012 freetaxusa It does not include unearned income as defined later in this chapter. 2012 freetaxusa Support. 2012 freetaxusa   Your child's support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. 2012 freetaxusa To figure your child's support, count support provided by you, your child, and others. 2012 freetaxusa However, a scholarship received by your child is not considered support if your child is a full-time student. 2012 freetaxusa See chapter 3 for details about support. 2012 freetaxusa Certain January 1 birthdays. 2012 freetaxusa   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. 2012 freetaxusa Figure 31-B. 2012 freetaxusa Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. 2012 freetaxusa Figure 31-B. 2012 freetaxusa Do You Have To Use Form 8615 To Figure Your Child's Tax?    IF a child was born on. 2012 freetaxusa . 2012 freetaxusa . 2012 freetaxusa THEN, at the end of 2013, the child is considered to be. 2012 freetaxusa . 2012 freetaxusa . 2012 freetaxusa January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. 2012 freetaxusa The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. 2012 freetaxusa  **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. 2012 freetaxusa  ***Do not use Form 8615 for this child. 2012 freetaxusa Providing Parental Information (Form 8615, lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. 2012 freetaxusa (If the parents filed a joint return, enter the name and social security number listed first on the joint return. 2012 freetaxusa ) On line C, check the box for the parent's filing status. 2012 freetaxusa See Which Parent's Return To Use at the beginning of this chapter for information on which parent's return information must be used on Form 8615. 2012 freetaxusa Parent with different tax year. 2012 freetaxusa   If the parent and the child do not have the same tax year, complete Form 8615 using the information on the parent's return for the tax year that ends in the child's tax year. 2012 freetaxusa Parent's return information not known timely. 2012 freetaxusa   If the information needed from the parent's return is not known by the time the child's return is due (usually April 15), you can file the return using estimates. 2012 freetaxusa   You can use any reasonable estimate. 2012 freetaxusa This includes using information from last year's return. 2012 freetaxusa If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. 2012 freetaxusa    When you get the correct information, file an amended return on Form 1040X, Amended U. 2012 freetaxusa S. 2012 freetaxusa Individual Income Tax Return. 2012 freetaxusa   Instead of using estimates, you can get an automatic 6-month extension of time to file if, by the date your return is due, you file Form 4868, Application for Automatic Extension of Time To File U. 2012 freetaxusa S. 2012 freetaxusa Individual Income Tax Return. 2012 freetaxusa Extensions are discussed in chapter 1. 2012 freetaxusa Step 1. 2012 freetaxusa Figuring the Child's Net Unearned Income (Form 8615, Part I) The first step in figuring a child's tax using Form 8615 is to figure the child's net unearned income. 2012 freetaxusa To do that, use Form 8615, Part I. 2012 freetaxusa Line 1 (unearned income). 2012 freetaxusa   If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. 2012 freetaxusa Adjusted gross income is shown on Form 1040, line 38, or Form 1040A, line 22. 2012 freetaxusa Form 1040EZ cannot be used if Form 8615 must be filed. 2012 freetaxusa   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. 2012 freetaxusa   However, if the child has: excluded any foreign earned income, deducted either a loss from self-employment, or deducted a net operating loss from another year, then use the Alternate Worksheet for Form 8615, Line 1, in Publication 929 to figure the amount to enter on Form 8615, line 1. 2012 freetaxusa Unearned income defined. 2012 freetaxusa   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually done. 2012 freetaxusa It includes taxable interest, dividends (including capital gain distributions), capital gains, unemployment compensation, the taxable part of social security and pension payments, and certain distributions from trusts. 2012 freetaxusa Unearned income includes amounts produced by assets the child obtained with earned income (such as interest on a savings account into which the child deposited wages). 2012 freetaxusa Nontaxable income. 2012 freetaxusa   For this purpose, unearned income includes only amounts the child must include in total income. 2012 freetaxusa Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. 2012 freetaxusa Income from property received as a gift. 2012 freetaxusa   A child's unearned income includes all income produced by property belonging to the child. 2012 freetaxusa This is true even if the property was transferred to the child, regardless of when the property was transferred or purchased or who transferred it. 2012 freetaxusa   A child's unearned income includes income produced by property given as a gift to the child. 2012 freetaxusa This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. 2012 freetaxusa Example. 2012 freetaxusa Amanda Black, age 13, received the following income. 2012 freetaxusa Dividends — $800 Wages — $2,100 Taxable interest — $1,200 Tax-exempt interest — $100 Net capital gains — $100 The dividends were qualified dividends on stock given to her by her grandparents. 2012 freetaxusa Amanda's unearned income is $2,100. 2012 freetaxusa This is the total of the dividends ($800), taxable interest ($1,200), and net capital gains ($100). 2012 freetaxusa Her wages are earned (not unearned) income because they are received for work actually done. 2012 freetaxusa Her tax-exempt interest is not included because it is nontaxable. 2012 freetaxusa Trust income. 2012 freetaxusa   If a child is the beneficiary of a trust, distributions of taxable interest, dividends, capital gains, and other unearned income from the trust are unearned income to the child. 2012 freetaxusa   However, for purposes of completing Form 8615, a taxable distribution from a qualified disability trust is considered earned income, not unearned income. 2012 freetaxusa Line 2 (deductions). 2012 freetaxusa   If the child does not itemize deductions on Schedule A (Form 1040), enter $2,000 on line 2. 2012 freetaxusa   If the child does itemize deductions, enter on line 2 the larger of: $1,000 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29, that are directly connected with the production of unearned income entered on line 1, or $2,000. 2012 freetaxusa Directly connected. 2012 freetaxusa   Itemized deductions are directly connected with the production of unearned income if they are for expenses paid to produce or collect taxable income or to manage, conserve, or maintain property held for producing income. 2012 freetaxusa These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. 2012 freetaxusa   These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). 2012 freetaxusa Only the amount greater than 2% of the child's adjusted gross income can be deducted. 2012 freetaxusa See chapter 28 for more information. 2012 freetaxusa Example 1. 2012 freetaxusa Roger, age 12, has unearned income of $8,000, no other income, no adjustments to income, and itemized deductions of $300 (net of the 2% limit) that are directly connected with his unearned income. 2012 freetaxusa His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. 2012 freetaxusa Roger enters $2,000 on line 2 because that is more than the total of $1,000 plus his directly connected itemized deductions of $300. 2012 freetaxusa Example 2. 2012 freetaxusa Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. 2012 freetaxusa She has no other income. 2012 freetaxusa She has itemized deductions of $1,050 (net of the 2% limit) that are directly connected with the production of her unearned income. 2012 freetaxusa Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). 2012 freetaxusa The amount on line 2 is $2,050. 2012 freetaxusa This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. 2012 freetaxusa Line 3. 2012 freetaxusa   Subtract line 2 from line 1 and enter the result on this line. 2012 freetaxusa If zero or less, do not complete the rest of the form. 2012 freetaxusa However, you must still attach Form 8615 to the child's tax return. 2012 freetaxusa Figure the tax on the child's taxable income in the normal manner. 2012 freetaxusa Line 4 (child's taxable income). 2012 freetaxusa   Enter on line 4 the child's taxable income from Form 1040, line 43, or Form 1040A, line 27. 2012 freetaxusa   However, if the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, see the Form 8615 instructions or Pub. 2012 freetaxusa 929. 2012 freetaxusa Line 5 (net unearned income). 2012 freetaxusa   A child's net unearned income cannot be more than his or her taxable income. 2012 freetaxusa Enter on Form 8615, line 5, the smaller of line 3 or line 4. 2012 freetaxusa This is the child's net unearned income. 2012 freetaxusa   If zero or less, do not complete the rest of the form. 2012 freetaxusa However, you must still attach Form 8615 to the child's tax return. 2012 freetaxusa Figure the tax on the child's taxable income in the normal manner. 2012 freetaxusa Step 2. 2012 freetaxusa Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) The next step in completing Form 8615 is to figure a tentative tax on the child's net unearned income at the parent's tax rate. 2012 freetaxusa 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 unearned income (plus the net unearned income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it. 2012 freetaxusa When figuring the tentative tax at the parent's tax rate on Form 8615, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net unearned income. 2012 freetaxusa For example, do not refigure the medical expense deduction. 2012 freetaxusa Figure the tentative tax on Form 8615, lines 6 through 13. 2012 freetaxusa Note. 2012 freetaxusa If the child or parent has any capital gains or losses, get Publication 929 for help in completing Form 8615, Part II. 2012 freetaxusa Line 6 (parent's taxable income). 2012 freetaxusa   Enter on line 6 the parent's taxable income from Form 1040, line 43, Form 1040A, line 27, or Form 1040EZ, line 6. 2012 freetaxusa   If the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) was used to figure the parent's tax, enter the amount from line 3 of that worksheet instead of the parent's taxable income. 2012 freetaxusa Line 7 (net unearned income of other children). 2012 freetaxusa   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. 2012 freetaxusa Do not include the amount from line 5 of the Form 8615 being completed. 2012 freetaxusa Example. 2012 freetaxusa Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. 2012 freetaxusa The children's net unearned income amounts on line 5 of their Forms 8615 are: Sharon — $800 Jerry — $600 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. 2012 freetaxusa Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). 2012 freetaxusa Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). 2012 freetaxusa Other children's information not available. 2012 freetaxusa   If the net unearned income of the other children is not available when the return is due, either file the return using estimates or get an extension of time to file. 2012 freetaxusa See Parent's return information not known timely , earlier. 2012 freetaxusa Line 11 (tentative tax). 2012 freetaxusa   Subtract line 10 from line 9 and enter the result on this line. 2012 freetaxusa This is the tentative tax. 2012 freetaxusa   If line 7 is blank, skip lines 12a and 12b and enter the amount from line 11 on line 13. 2012 freetaxusa Also skip the discussion for lines 12a and 12b that follows. 2012 freetaxusa Lines 12a and 12b (dividing the tentative tax). 2012 freetaxusa   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 unearned income. 2012 freetaxusa This is done on lines 12a, 12b, and 13. 2012 freetaxusa Add the amount on line 7 to the amount on line 5 and enter the total on line 12a. 2012 freetaxusa Divide the amount on line 5 by the amount on line 12a and enter the result, as a decimal, on line 12b. 2012 freetaxusa Example. 2012 freetaxusa In the earlier example under Line 7 (net unearned income of other children), Sharon's Form 8615 shows $1,600 on line 7. 2012 freetaxusa The amount entered on line 12a is $2,400, the total of the amounts on lines 5 and 7 ($800 + $1,600). 2012 freetaxusa The decimal on line 12b is  . 2012 freetaxusa 333, figured as follows and rounded to three places. 2012 freetaxusa   $800 = . 2012 freetaxusa 333     $2,400   Step 3. 2012 freetaxusa Figuring the Child's Tax (Form 8615, Part III) The final step in figuring a child's tax using Form 8615 is to determine the larger of: The total of: The child's share of the tentative tax based on the parent's tax rate, plus The tax on the child's taxable income in excess of net unearned income, figured at the child's tax rate, or The tax on the child's taxable income, figured at the child's tax rate. 2012 freetaxusa This is the child's tax. 2012 freetaxusa It is figured on Form 8615, lines 14 through 18. 2012 freetaxusa Alternative minimum tax. 2012 freetaxusa   A child may be subject to alternative minimum tax (AMT) if he or she has certain items given preferential treatment under the tax law. 2012 freetaxusa See Alternative Minimum Tax (AMT) in chapter 30. 2012 freetaxusa    For more information on who is liable for AMT and how to figure it, see Form 6251, Alternative Minimum Tax—Individuals. 2012 freetaxusa For information on special limits that apply to a child who files Form 6251, see Certain Children Under Age 24 in the Instructions for Form 6251. 2012 freetaxusa Prev  Up  Next   Home   More Online Publications