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Filing 2012 Tax Returns

Unemployed File TaxesFree Online Federal And State Tax FilingWhen Can I File My 2011 TaxesTax AmendmentsAmend 2012 Tax Return Online1040 Ez InstructionsEz Form 2014Irs Gov 1040xFreetaxusa 20111040ez Tax FormHow To Do An Amended Tax Return211 Free Tax Preparation Help OnlineMilitary Tax DeductionsFree 1040ez Tax FormsTax Act 2009E File State Taxes Only FreeDo I Have To File State TaxesState Income Tax Filing Free1040ez Tax TableFederal Taxes 2012Turbotax FreeFile Free Tax Extension OnlineAmend My Tax Return OnlineOnline State Tax FilingFree State Tax File OnlineFile State And Federal Taxes Online FreeFree File Tax ExtensionFile A Tax ExtensionIrs Tax Extention FormFree Tax Filing OnlineFederal Tax Forms 1040xFile Taxes 20102010 1040 Tax FormFree Income Tax ExtensionFree State Tax OnlineHr Block TaxesFile Federal And State Taxes Online For FreeState Income Tax Form 2012Amendment FormsForm 1040 2012

Filing 2012 Tax Returns

Filing 2012 tax returns Publication 538 - Introductory Material Table of Contents IntroductionOrdering forms and publications. Filing 2012 tax returns Tax Questions. Filing 2012 tax returns Reminders Useful Items - You may want to see: Introduction Every taxpayer (individuals, business entities, etc. Filing 2012 tax returns ) must figure taxable income on the basis of an annual accounting period called a tax year. Filing 2012 tax returns The calendar year is the most common tax year. Filing 2012 tax returns Other tax years include a fiscal year and a short tax year. Filing 2012 tax returns Each taxpayer must use a consistent accounting method, which is a set of rules for determining when to report income and expenses. Filing 2012 tax returns The most commonly used accounting methods are the cash method and the accrual method. Filing 2012 tax returns Under the cash method, you generally report income in the tax year you receive it, and deduct expenses in the tax year in which you pay them. Filing 2012 tax returns Under the accrual method, you generally report income in the tax year you earn it, regardless of when payment is received. Filing 2012 tax returns You deduct expenses in the tax year you incur them, regardless of when payment is made. Filing 2012 tax returns This publication explains some of the rules for accounting periods and accounting methods. Filing 2012 tax returns In some cases, you may have to refer to other sources for a more in-depth explanation of the topic. Filing 2012 tax returns Comments and suggestions. Filing 2012 tax returns   We welcome your comments about this publication and your suggestions for future editions. Filing 2012 tax returns   You can write to us at the following address: Internal Revenue Service Business, Exempt Organization and International Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. Filing 2012 tax returns NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Filing 2012 tax returns Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Filing 2012 tax returns   You can email us at taxforms@irs. Filing 2012 tax returns gov. Filing 2012 tax returns Please put “Publications Comment” on the subject line. Filing 2012 tax returns You can also send us comments from www. Filing 2012 tax returns irs. Filing 2012 tax returns gov/formspubs. Filing 2012 tax returns Select “Comment on Tax Forms and Publications” under “More information. Filing 2012 tax returns ”   Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products. Filing 2012 tax returns Ordering forms and publications. Filing 2012 tax returns   Visit www. Filing 2012 tax returns irs. Filing 2012 tax returns gov/formspubs to download forms and publications, call 1-800–829–3676, or write to the address below and receive a response within 10 days after your request is received. Filing 2012 tax returns Internal Revenue Service 1201 N. Filing 2012 tax returns Mitsubishi Motorway Bloomington, IL 61705-6613 Tax Questions. Filing 2012 tax returns   If you have a tax question, check the information available on IRS. Filing 2012 tax returns gov or call 1-800-829-1040. Filing 2012 tax returns We cannot answer tax questions sent to the above address. Filing 2012 tax returns Reminders Photographs of missing children. Filing 2012 tax returns  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Filing 2012 tax returns Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Filing 2012 tax returns 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. Filing 2012 tax returns Useful Items - You may want to see: Publication 537 Installment Sales 541 Partnerships 542 Corporations Form (and Instructions) 1128 Application To Adopt, Change, or Retain a Tax Year 2553 Election by a Small Business Corporation 3115 Application for Change in Accounting Method 8716 Election To Have a Tax Year Other Than a Required Tax Year See Ordering forms and publications, earlier for information about getting these publications and forms. Filing 2012 tax returns Prev  Up  Next   Home   More Online Publications
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Understanding your CP259H Notice

We sent you this notice because our records indicate you are a tax-exempt political organization and you did not file a required Form 990/990-EZ, Return of Organization Exempt From Income Tax.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).
 


What you need to do

  • Disregard this notice if you have filed the return within the last four weeks using the same name and EIN listed on the notice.
  • Otherwise, file your required Form 990 or Form 990-EZ immediately according to the instructions on the notice.
    • If you don't think you need to file, complete the Response form enclosed with your notice and mail it to us using the envelope provided.
    • If you filed more than four weeks ago or used a different name or EIN, complete the Response form enclosed with your notice and mail it to us in the envelope provided along with a signed and dated copy of the return.

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Answers to Common Questions

Which political organizations must file a Form 990 or Form 990-EZ?
A tax-exempt political organization must file Form 990 or 990-EZ if it has gross receipts of $25,000 or more, unless excepted. A political organization that is a qualified state or local political organization must file Form 990 or 990-EZ only if it has gross receipts of $100,000 or more. Political organizations may not submit Form 990-N.

When is Form 990 or Form 990-EZ due?
Form 990 or 990-EZ is due by the 15th day of the 5th month after the end of the tax year. Thus, for a calendar year taxpayer, Form 990 or Form 990-EZ is due on May 15 of the following year. If any due date falls on a Saturday, Sunday or legal holiday, the organization can file the return on the next business day.

Can I get help over the phone?
If you have questions and/or need help completing the form, please call 1-877-829-5500. Personal assistance is available Monday through Friday, 7:00 a.m. to 7:00 p.m. CT.

Where can I go for more information about tax-exempt organizations?
For more information on tax-exempt organizations see Tax Information for Charities & Other Non-Profits.


Tips for next year

Review the political organization resources at Tax Information for Political Organizations.


Understanding your notice

Reading your notice
Your notice may look different from the sample because the information contained in your notice is tailored to your situation.

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Page Last Reviewed or Updated: 29-Mar-2014

The Filing 2012 Tax Returns

Filing 2012 tax returns 31. Filing 2012 tax returns   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. Filing 2012 tax returns Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. Filing 2012 tax returns Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. Filing 2012 tax returns Figuring the Child's Tax (Form 8615, Part III) What's New Net Investment Income Tax. Filing 2012 tax returns . Filing 2012 tax returns  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). Filing 2012 tax returns NIIT is a 3. Filing 2012 tax returns 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. Filing 2012 tax returns Use Form 8960, Net Investment Income Tax, to figure this tax. Filing 2012 tax returns For more information on NIIT, go to www. Filing 2012 tax returns irs. Filing 2012 tax returns gov and enter “Net Investment Income Tax” in the search box. Filing 2012 tax returns Introduction This chapter discusses the following two rules that may affect the tax on unearned income of certain children. Filing 2012 tax returns 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. Filing 2012 tax returns (See Parent's Election To Report Child's Interest and Dividends , later. Filing 2012 tax returns ) 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. Filing 2012 tax returns (See Tax for Certain Children Who Have Unearned Income , later. Filing 2012 tax returns ) For these rules, the term “child” includes a legally adopted child and a stepchild. Filing 2012 tax returns These rules apply whether or not the child is a dependent. Filing 2012 tax returns 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. Filing 2012 tax returns 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 . Filing 2012 tax returns 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. Filing 2012 tax returns Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . Filing 2012 tax returns Parents are married. Filing 2012 tax returns   If the child's parents file separate returns, use the return of the parent with the greater taxable income. Filing 2012 tax returns Parents not living together. Filing 2012 tax returns   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. Filing 2012 tax returns If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. Filing 2012 tax returns   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. Filing 2012 tax returns Parents are divorced. Filing 2012 tax returns   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. Filing 2012 tax returns Custodial parent remarried. Filing 2012 tax returns   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. Filing 2012 tax returns Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. Filing 2012 tax returns Do not use the return of the noncustodial parent. Filing 2012 tax returns   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. Filing 2012 tax returns If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. Filing 2012 tax returns Parents never married. Filing 2012 tax returns   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. Filing 2012 tax returns If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. Filing 2012 tax returns Widowed parent remarried. Filing 2012 tax returns   If a widow or widower remarries, the new spouse is treated as the child's other parent. Filing 2012 tax returns The rules explained earlier under Custodial parent remarried apply. Filing 2012 tax returns 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. Filing 2012 tax returns If you do, your child will not have to file a return. Filing 2012 tax returns You can make this election only if all the following conditions are met. Filing 2012 tax returns Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. Filing 2012 tax returns Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). Filing 2012 tax returns The child's gross income was less than $10,000. Filing 2012 tax returns The child is required to file a return unless you make this election. Filing 2012 tax returns The child does not file a joint return for the year. Filing 2012 tax returns 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. Filing 2012 tax returns No federal income tax was taken out of your child's income under the backup withholding rules. Filing 2012 tax returns You are the parent whose return must be used when applying the special tax rules for children. Filing 2012 tax returns (See Which Parent's Return To Use , earlier. Filing 2012 tax returns ) These conditions are also shown in Figure 31-A. Filing 2012 tax returns Certain January 1 birthdays. Filing 2012 tax returns   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. Filing 2012 tax returns You cannot make this election for such a child unless the child was a full-time student. Filing 2012 tax returns   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. Filing 2012 tax returns You cannot make this election for such a child. Filing 2012 tax returns Full-time student. Filing 2012 tax returns   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. Filing 2012 tax returns A school includes a technical, trade, or mechanical school. Filing 2012 tax returns It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. Filing 2012 tax returns How to make the election. Filing 2012 tax returns   Make the election by attaching Form 8814 to your Form 1040. Filing 2012 tax returns (If you make this election, you cannot file Form 1040A or Form 1040EZ. Filing 2012 tax returns ) Attach a separate Form 8814 for each child for whom you make the election. Filing 2012 tax returns You can make the election for one or more children and not for others. Filing 2012 tax returns Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. Filing 2012 tax returns Rate may be higher. Filing 2012 tax returns   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. Filing 2012 tax returns This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. Filing 2012 tax returns 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. Filing 2012 tax returns Deductions you cannot take. Filing 2012 tax returns   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. Filing 2012 tax returns The additional standard deduction if the child is blind. Filing 2012 tax returns The deduction for a penalty on an early withdrawal of your child's savings. Filing 2012 tax returns Itemized deductions (such as your child's investment expenses or charitable contributions). Filing 2012 tax returns Reduced deductions or credits. Filing 2012 tax returns   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return including the following. Filing 2012 tax returns Deduction for contributions to a traditional individual retirement arrangement (IRA). Filing 2012 tax returns Deduction for student loan interest. Filing 2012 tax returns Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. Filing 2012 tax returns Credit for child and dependent care expenses. Filing 2012 tax returns Child tax credit. Filing 2012 tax returns Education tax credits. Filing 2012 tax returns Earned income credit. Filing 2012 tax returns Penalty for underpayment of estimated tax. Filing 2012 tax returns   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. Filing 2012 tax returns 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. Filing 2012 tax returns See chapter 4 for more information. Filing 2012 tax returns Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. Filing 2012 tax returns Only the amount over $2,000 is added to your income. Filing 2012 tax returns The amount over $2,000 is shown on Form 8814, line 6. Filing 2012 tax returns Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. Filing 2012 tax returns Include the amount from Form 8814, line 12, on Form 1040, line 21. Filing 2012 tax returns Enter “Form 8814” on the dotted line next to line 21. Filing 2012 tax returns 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. Filing 2012 tax returns Capital gain distributions and qualified dividends. Filing 2012 tax returns   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. Filing 2012 tax returns If your child's dividend income included any qualified dividends, see Qualified dividends under Figuring Child's Income in Publication 929, Part 2. Filing 2012 tax returns 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. Filing 2012 tax returns This tax is added to the tax figured on your income. Filing 2012 tax returns This additional tax is the smaller of: 10% × (your child's gross income − $1,000), or $100. Filing 2012 tax returns Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44. Filing 2012 tax returns Check box a on Form 1040, line 44. Filing 2012 tax returns Figure 31-A. Filing 2012 tax returns Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. Filing 2012 tax returns Figure 31–A. Filing 2012 tax returns 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. Filing 2012 tax returns 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. Filing 2012 tax returns Attach the completed form to the child's Form 1040 or Form 1040A. Filing 2012 tax returns When Form 8615 must be filed. Filing 2012 tax returns   Form 8615 must be filed for a child if all of the following statements are true. Filing 2012 tax returns The child's investment income was more than $2,000. Filing 2012 tax returns The child is required to file a return for 2013. Filing 2012 tax returns 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. Filing 2012 tax returns At least one of the child's parents was alive at the end of 2013. Filing 2012 tax returns The child does not file a joint return for 2013. Filing 2012 tax returns These conditions are also shown in  Figure 31-B. Filing 2012 tax returns Earned income. Filing 2012 tax returns   Earned income includes salaries, wages, tips, and other payments received for personal services performed. Filing 2012 tax returns It does not include unearned income as defined later in this chapter. Filing 2012 tax returns Support. Filing 2012 tax returns   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. Filing 2012 tax returns To figure your child's support, count support provided by you, your child, and others. Filing 2012 tax returns However, a scholarship received by your child is not considered support if your child is a full-time student. Filing 2012 tax returns See chapter 3 for details about support. Filing 2012 tax returns Certain January 1 birthdays. Filing 2012 tax returns   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. Filing 2012 tax returns Figure 31-B. Filing 2012 tax returns Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. Filing 2012 tax returns Figure 31-B. Filing 2012 tax returns Do You Have To Use Form 8615 To Figure Your Child's Tax?    IF a child was born on. Filing 2012 tax returns . Filing 2012 tax returns . Filing 2012 tax returns THEN, at the end of 2013, the child is considered to be. Filing 2012 tax returns . Filing 2012 tax returns . Filing 2012 tax returns January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. Filing 2012 tax returns The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. Filing 2012 tax returns  **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. Filing 2012 tax returns  ***Do not use Form 8615 for this child. Filing 2012 tax returns Providing Parental Information (Form 8615, lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. Filing 2012 tax returns (If the parents filed a joint return, enter the name and social security number listed first on the joint return. Filing 2012 tax returns ) On line C, check the box for the parent's filing status. Filing 2012 tax returns 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. Filing 2012 tax returns Parent with different tax year. Filing 2012 tax returns   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. Filing 2012 tax returns Parent's return information not known timely. Filing 2012 tax returns   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. Filing 2012 tax returns   You can use any reasonable estimate. Filing 2012 tax returns This includes using information from last year's return. Filing 2012 tax returns If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. Filing 2012 tax returns    When you get the correct information, file an amended return on Form 1040X, Amended U. Filing 2012 tax returns S. Filing 2012 tax returns Individual Income Tax Return. Filing 2012 tax returns   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. Filing 2012 tax returns S. Filing 2012 tax returns Individual Income Tax Return. Filing 2012 tax returns Extensions are discussed in chapter 1. Filing 2012 tax returns Step 1. Filing 2012 tax returns 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. Filing 2012 tax returns To do that, use Form 8615, Part I. Filing 2012 tax returns Line 1 (unearned income). Filing 2012 tax returns   If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. Filing 2012 tax returns Adjusted gross income is shown on Form 1040, line 38, or Form 1040A, line 22. Filing 2012 tax returns Form 1040EZ cannot be used if Form 8615 must be filed. Filing 2012 tax returns   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. Filing 2012 tax returns   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. Filing 2012 tax returns Unearned income defined. Filing 2012 tax returns   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually done. Filing 2012 tax returns 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. Filing 2012 tax returns 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). Filing 2012 tax returns Nontaxable income. Filing 2012 tax returns   For this purpose, unearned income includes only amounts the child must include in total income. Filing 2012 tax returns Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. Filing 2012 tax returns Income from property received as a gift. Filing 2012 tax returns   A child's unearned income includes all income produced by property belonging to the child. Filing 2012 tax returns 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. Filing 2012 tax returns   A child's unearned income includes income produced by property given as a gift to the child. Filing 2012 tax returns This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. Filing 2012 tax returns Example. Filing 2012 tax returns Amanda Black, age 13, received the following income. Filing 2012 tax returns 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. Filing 2012 tax returns Amanda's unearned income is $2,100. Filing 2012 tax returns This is the total of the dividends ($800), taxable interest ($1,200), and net capital gains ($100). Filing 2012 tax returns Her wages are earned (not unearned) income because they are received for work actually done. Filing 2012 tax returns Her tax-exempt interest is not included because it is nontaxable. Filing 2012 tax returns Trust income. Filing 2012 tax returns   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. Filing 2012 tax returns   However, for purposes of completing Form 8615, a taxable distribution from a qualified disability trust is considered earned income, not unearned income. Filing 2012 tax returns Line 2 (deductions). Filing 2012 tax returns   If the child does not itemize deductions on Schedule A (Form 1040), enter $2,000 on line 2. Filing 2012 tax returns   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. Filing 2012 tax returns Directly connected. Filing 2012 tax returns   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. Filing 2012 tax returns These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. Filing 2012 tax returns   These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). Filing 2012 tax returns Only the amount greater than 2% of the child's adjusted gross income can be deducted. Filing 2012 tax returns See chapter 28 for more information. Filing 2012 tax returns Example 1. Filing 2012 tax returns 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. Filing 2012 tax returns His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. Filing 2012 tax returns 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. Filing 2012 tax returns Example 2. Filing 2012 tax returns Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. Filing 2012 tax returns She has no other income. Filing 2012 tax returns She has itemized deductions of $1,050 (net of the 2% limit) that are directly connected with the production of her unearned income. Filing 2012 tax returns Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). Filing 2012 tax returns The amount on line 2 is $2,050. Filing 2012 tax returns This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. Filing 2012 tax returns Line 3. Filing 2012 tax returns   Subtract line 2 from line 1 and enter the result on this line. Filing 2012 tax returns If zero or less, do not complete the rest of the form. Filing 2012 tax returns However, you must still attach Form 8615 to the child's tax return. Filing 2012 tax returns Figure the tax on the child's taxable income in the normal manner. Filing 2012 tax returns Line 4 (child's taxable income). Filing 2012 tax returns   Enter on line 4 the child's taxable income from Form 1040, line 43, or Form 1040A, line 27. Filing 2012 tax returns   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. Filing 2012 tax returns 929. Filing 2012 tax returns Line 5 (net unearned income). Filing 2012 tax returns   A child's net unearned income cannot be more than his or her taxable income. Filing 2012 tax returns Enter on Form 8615, line 5, the smaller of line 3 or line 4. Filing 2012 tax returns This is the child's net unearned income. Filing 2012 tax returns   If zero or less, do not complete the rest of the form. Filing 2012 tax returns However, you must still attach Form 8615 to the child's tax return. Filing 2012 tax returns Figure the tax on the child's taxable income in the normal manner. Filing 2012 tax returns Step 2. Filing 2012 tax returns 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. Filing 2012 tax returns 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. Filing 2012 tax returns 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. Filing 2012 tax returns For example, do not refigure the medical expense deduction. Filing 2012 tax returns Figure the tentative tax on Form 8615, lines 6 through 13. Filing 2012 tax returns Note. Filing 2012 tax returns If the child or parent has any capital gains or losses, get Publication 929 for help in completing Form 8615, Part II. Filing 2012 tax returns Line 6 (parent's taxable income). Filing 2012 tax returns   Enter on line 6 the parent's taxable income from Form 1040, line 43, Form 1040A, line 27, or Form 1040EZ, line 6. Filing 2012 tax returns   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. Filing 2012 tax returns Line 7 (net unearned income of other children). Filing 2012 tax returns   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. Filing 2012 tax returns Do not include the amount from line 5 of the Form 8615 being completed. Filing 2012 tax returns Example. Filing 2012 tax returns Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. Filing 2012 tax returns 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. Filing 2012 tax returns Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). Filing 2012 tax returns Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). Filing 2012 tax returns Other children's information not available. Filing 2012 tax returns   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. Filing 2012 tax returns See Parent's return information not known timely , earlier. Filing 2012 tax returns Line 11 (tentative tax). Filing 2012 tax returns   Subtract line 10 from line 9 and enter the result on this line. Filing 2012 tax returns This is the tentative tax. Filing 2012 tax returns   If line 7 is blank, skip lines 12a and 12b and enter the amount from line 11 on line 13. Filing 2012 tax returns Also skip the discussion for lines 12a and 12b that follows. Filing 2012 tax returns Lines 12a and 12b (dividing the tentative tax). Filing 2012 tax returns   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. Filing 2012 tax returns This is done on lines 12a, 12b, and 13. Filing 2012 tax returns Add the amount on line 7 to the amount on line 5 and enter the total on line 12a. Filing 2012 tax returns Divide the amount on line 5 by the amount on line 12a and enter the result, as a decimal, on line 12b. Filing 2012 tax returns Example. Filing 2012 tax returns In the earlier example under Line 7 (net unearned income of other children), Sharon's Form 8615 shows $1,600 on line 7. Filing 2012 tax returns The amount entered on line 12a is $2,400, the total of the amounts on lines 5 and 7 ($800 + $1,600). Filing 2012 tax returns The decimal on line 12b is  . Filing 2012 tax returns 333, figured as follows and rounded to three places. Filing 2012 tax returns   $800 = . Filing 2012 tax returns 333     $2,400   Step 3. Filing 2012 tax returns 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. Filing 2012 tax returns This is the child's tax. Filing 2012 tax returns It is figured on Form 8615, lines 14 through 18. Filing 2012 tax returns Alternative minimum tax. Filing 2012 tax returns   A child may be subject to alternative minimum tax (AMT) if he or she has certain items given preferential treatment under the tax law. Filing 2012 tax returns See Alternative Minimum Tax (AMT) in chapter 30. Filing 2012 tax returns    For more information on who is liable for AMT and how to figure it, see Form 6251, Alternative Minimum Tax—Individuals. Filing 2012 tax returns 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. Filing 2012 tax returns Prev  Up  Next   Home   More Online Publications