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H&r block online filing 3. H&r block online filing   Self-Employment Tax Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Who Must Pay Self-Employment Tax?Employed by a U. H&r block online filing S. H&r block online filing Church Effect of Exclusion Members of the Clergy Income From U. H&r block online filing S. H&r block online filing Possessions Exemption From Social Security and Medicare Taxes Topics - This chapter discusses: Who must pay self-employment tax, and Who is exempt from self-employment tax. H&r block online filing Useful Items - You may want to see: Publication 334 Tax Guide for Small Business 517 Social Security and Other Information for Members of the Clergy and Religious Workers Form (and Instructions) Form 1040-PR Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia Form 1040-SS U. H&r block online filing S. H&r block online filing Self-Employment Tax Return Form 4361 Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners Schedule SE (Form 1040) Self-Employment Tax See chapter 7 for information about getting these publications and forms. H&r block online filing Who Must Pay Self-Employment Tax? If you are a self-employed U. H&r block online filing S. H&r block online filing citizen or resident, the rules for paying self-employment tax are generally the same whether you are living in the United States or abroad. H&r block online filing The self-employment tax is a social security and Medicare tax on net earnings from self- employment. H&r block online filing You must pay self-employment tax if your net earnings from self-employment are at least $400. H&r block online filing For 2013, the maximum amount of net earnings from self-employment that is subject to the social security portion of the tax is $113,700. H&r block online filing All net earnings are subject to the Medicare portion of the tax. H&r block online filing Employed by a U. H&r block online filing S. H&r block online filing Church If you were employed by a U. H&r block online filing S. H&r block online filing church or a qualified church-controlled organization that chose exemption from social security and Medicare taxes and you received wages of $108. H&r block online filing 28 or more from the organization, the amounts paid to you are subject to self-employment tax. H&r block online filing However, you can choose to be exempt from social security and Medicare taxes if you are a member of a recognized religious sect. H&r block online filing See Publication 517 for more information about church employees and self-employment tax. H&r block online filing Effect of Exclusion You must take all of your self-employment income into account in figuring your net earnings from self-employment, even income that is exempt from income tax because of the foreign earned income exclusion. H&r block online filing Example. H&r block online filing You are in business abroad as a consultant and qualify for the foreign earned income exclusion. H&r block online filing Your foreign earned income is $95,000, your business deductions total $27,000, and your net profit is $68,000. H&r block online filing You must pay self-employment tax on all of your net profit, including the amount you can exclude from income. H&r block online filing Members of the Clergy If you are a member of the clergy, you are treated as self-employed for self-employment tax purposes. H&r block online filing Your U. H&r block online filing S. H&r block online filing self-employment tax is based upon net earnings from self-employment figured without regard to the foreign earned income exclusion or the foreign housing exclusion. H&r block online filing You can receive exemption from coverage for your ministerial duties if you conscientiously oppose public insurance due to religious reasons or if you oppose it due to the religious principles of your denomination. H&r block online filing You must file Form 4361 to apply for this exemption. H&r block online filing This subject is discussed in further detail in Publication 517. H&r block online filing Income From U. H&r block online filing S. H&r block online filing Possessions If you are a U. H&r block online filing S. H&r block online filing citizen or resident alien and you own and operate a business in Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, or the U. H&r block online filing S. H&r block online filing Virgin Islands, you must pay tax on your net earnings from self-employment (if they are $400 or more) from those sources. H&r block online filing You must pay the self-employment tax whether or not the income is exempt from U. H&r block online filing S. H&r block online filing income taxes (or whether or not you otherwise must file a U. H&r block online filing S. H&r block online filing income tax return). H&r block online filing Unless your situation is described below, attach Schedule SE (Form 1040) to your U. H&r block online filing S. H&r block online filing income tax return. H&r block online filing If you do not have to file Form 1040 with the United States and you are a resident of any of the U. H&r block online filing S. H&r block online filing possessions listed in the preceding paragraph, figure your self-employment tax on Form 1040-SS. H&r block online filing Residents of Puerto Rico may file the Spanish-language Formulario 1040-PR. H&r block online filing If you are not enclosing a check or money order, file your return with the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 If you are enclosing a check or money order, file your return with the: Department of the Treasury P. H&r block online filing O. H&r block online filing Box 1303 Charlotte, NC 28201-1303 Exemption From Social Security and Medicare Taxes The United States may reach agreements with foreign countries to eliminate dual coverage and dual contributions (taxes) to social security systems for the same work. H&r block online filing See Bilateral Social Security (Totalization) Agreements in chapter 2 under Social Security and Medicare Taxes. H&r block online filing As a general rule, self-employed persons who are subject to dual taxation will only be covered by the social security system of the country where they reside. H&r block online filing For more information on how any specific agreement affects self-employed persons, contact the United States Social Security Administration, as discussed under Bilateral Social Security (Totalization) Agreements in chapter 2. H&r block online filing If your self-employment earnings should be exempt from foreign social security tax and subject only to U. H&r block online filing S. H&r block online filing self-employment tax, you should request a certificate of coverage from the U. H&r block online filing S. H&r block online filing Social Security Administration, Office of International Programs. H&r block online filing The certificate will establish your exemption from the foreign social security tax. H&r block online filing Send the request to the: Social Security Administration Office of International Programs P. H&r block online filing O. H&r block online filing Box 17741 Baltimore, MD 21235-7741 Prev  Up  Next   Home   More Online Publications
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H&r block online filing 31. H&r block online filing   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. H&r block online filing Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. H&r block online filing Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. H&r block online filing Figuring the Child's Tax (Form 8615, Part III) What's New Net Investment Income Tax. H&r block online filing . H&r block online filing  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). H&r block online filing NIIT is a 3. H&r block online filing 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. H&r block online filing Use Form 8960, Net Investment Income Tax, to figure this tax. H&r block online filing For more information on NIIT, go to www. H&r block online filing irs. H&r block online filing gov and enter “Net Investment Income Tax” in the search box. H&r block online filing Introduction This chapter discusses the following two rules that may affect the tax on unearned income of certain children. H&r block online filing 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. H&r block online filing (See Parent's Election To Report Child's Interest and Dividends , later. H&r block online filing ) 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. H&r block online filing (See Tax for Certain Children Who Have Unearned Income , later. H&r block online filing ) For these rules, the term “child” includes a legally adopted child and a stepchild. H&r block online filing These rules apply whether or not the child is a dependent. H&r block online filing 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. H&r block online filing 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 . H&r block online filing 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. H&r block online filing Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . H&r block online filing Parents are married. H&r block online filing   If the child's parents file separate returns, use the return of the parent with the greater taxable income. H&r block online filing Parents not living together. H&r block online filing   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. H&r block online filing If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. H&r block online filing   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. H&r block online filing Parents are divorced. H&r block online filing   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. H&r block online filing Custodial parent remarried. H&r block online filing   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. H&r block online filing Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. H&r block online filing Do not use the return of the noncustodial parent. H&r block online filing   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. H&r block online filing If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. H&r block online filing Parents never married. H&r block online filing   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. H&r block online filing If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. H&r block online filing Widowed parent remarried. H&r block online filing   If a widow or widower remarries, the new spouse is treated as the child's other parent. H&r block online filing The rules explained earlier under Custodial parent remarried apply. H&r block online filing 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. H&r block online filing If you do, your child will not have to file a return. H&r block online filing You can make this election only if all the following conditions are met. H&r block online filing Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. H&r block online filing Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). H&r block online filing The child's gross income was less than $10,000. H&r block online filing The child is required to file a return unless you make this election. H&r block online filing The child does not file a joint return for the year. H&r block online filing 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. H&r block online filing No federal income tax was taken out of your child's income under the backup withholding rules. H&r block online filing You are the parent whose return must be used when applying the special tax rules for children. H&r block online filing (See Which Parent's Return To Use , earlier. H&r block online filing ) These conditions are also shown in Figure 31-A. H&r block online filing Certain January 1 birthdays. H&r block online filing   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. H&r block online filing You cannot make this election for such a child unless the child was a full-time student. H&r block online filing   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. H&r block online filing You cannot make this election for such a child. H&r block online filing Full-time student. H&r block online filing   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. H&r block online filing A school includes a technical, trade, or mechanical school. H&r block online filing It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. H&r block online filing How to make the election. H&r block online filing   Make the election by attaching Form 8814 to your Form 1040. H&r block online filing (If you make this election, you cannot file Form 1040A or Form 1040EZ. H&r block online filing ) Attach a separate Form 8814 for each child for whom you make the election. H&r block online filing You can make the election for one or more children and not for others. H&r block online filing Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. H&r block online filing Rate may be higher. H&r block online filing   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. H&r block online filing This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. H&r block online filing 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. H&r block online filing Deductions you cannot take. H&r block online filing   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. H&r block online filing The additional standard deduction if the child is blind. H&r block online filing The deduction for a penalty on an early withdrawal of your child's savings. H&r block online filing Itemized deductions (such as your child's investment expenses or charitable contributions). H&r block online filing Reduced deductions or credits. H&r block online filing   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return including the following. H&r block online filing Deduction for contributions to a traditional individual retirement arrangement (IRA). H&r block online filing Deduction for student loan interest. H&r block online filing Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. H&r block online filing Credit for child and dependent care expenses. H&r block online filing Child tax credit. H&r block online filing Education tax credits. H&r block online filing Earned income credit. H&r block online filing Penalty for underpayment of estimated tax. H&r block online filing   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. H&r block online filing 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. H&r block online filing See chapter 4 for more information. H&r block online filing Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. H&r block online filing Only the amount over $2,000 is added to your income. H&r block online filing The amount over $2,000 is shown on Form 8814, line 6. H&r block online filing Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. H&r block online filing Include the amount from Form 8814, line 12, on Form 1040, line 21. H&r block online filing Enter “Form 8814” on the dotted line next to line 21. H&r block online filing 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. H&r block online filing Capital gain distributions and qualified dividends. H&r block online filing   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. H&r block online filing If your child's dividend income included any qualified dividends, see Qualified dividends under Figuring Child's Income in Publication 929, Part 2. H&r block online filing 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. H&r block online filing This tax is added to the tax figured on your income. H&r block online filing This additional tax is the smaller of: 10% × (your child's gross income − $1,000), or $100. H&r block online filing Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44. H&r block online filing Check box a on Form 1040, line 44. H&r block online filing Figure 31-A. H&r block online filing Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. H&r block online filing Figure 31–A. H&r block online filing 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. H&r block online filing 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. H&r block online filing Attach the completed form to the child's Form 1040 or Form 1040A. H&r block online filing When Form 8615 must be filed. H&r block online filing   Form 8615 must be filed for a child if all of the following statements are true. H&r block online filing The child's investment income was more than $2,000. H&r block online filing The child is required to file a return for 2013. H&r block online filing 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. H&r block online filing At least one of the child's parents was alive at the end of 2013. H&r block online filing The child does not file a joint return for 2013. H&r block online filing These conditions are also shown in  Figure 31-B. H&r block online filing Earned income. H&r block online filing   Earned income includes salaries, wages, tips, and other payments received for personal services performed. H&r block online filing It does not include unearned income as defined later in this chapter. H&r block online filing Support. H&r block online filing   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. H&r block online filing To figure your child's support, count support provided by you, your child, and others. H&r block online filing However, a scholarship received by your child is not considered support if your child is a full-time student. H&r block online filing See chapter 3 for details about support. H&r block online filing Certain January 1 birthdays. H&r block online filing   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. H&r block online filing Figure 31-B. H&r block online filing Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. H&r block online filing Figure 31-B. H&r block online filing Do You Have To Use Form 8615 To Figure Your Child's Tax?    IF a child was born on. H&r block online filing . H&r block online filing . H&r block online filing THEN, at the end of 2013, the child is considered to be. H&r block online filing . H&r block online filing . H&r block online filing January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. H&r block online filing The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. H&r block online filing  **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. H&r block online filing  ***Do not use Form 8615 for this child. H&r block online filing Providing Parental Information (Form 8615, lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. H&r block online filing (If the parents filed a joint return, enter the name and social security number listed first on the joint return. H&r block online filing ) On line C, check the box for the parent's filing status. H&r block online filing 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. H&r block online filing Parent with different tax year. H&r block online filing   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. H&r block online filing Parent's return information not known timely. H&r block online filing   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. H&r block online filing   You can use any reasonable estimate. H&r block online filing This includes using information from last year's return. H&r block online filing If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. H&r block online filing    When you get the correct information, file an amended return on Form 1040X, Amended U. H&r block online filing S. H&r block online filing Individual Income Tax Return. H&r block online filing   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. H&r block online filing S. H&r block online filing Individual Income Tax Return. H&r block online filing Extensions are discussed in chapter 1. H&r block online filing Step 1. H&r block online filing 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. H&r block online filing To do that, use Form 8615, Part I. H&r block online filing Line 1 (unearned income). H&r block online filing   If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. H&r block online filing Adjusted gross income is shown on Form 1040, line 38, or Form 1040A, line 22. H&r block online filing Form 1040EZ cannot be used if Form 8615 must be filed. H&r block online filing   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. H&r block online filing   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. H&r block online filing Unearned income defined. H&r block online filing   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually done. H&r block online filing 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. H&r block online filing 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). H&r block online filing Nontaxable income. H&r block online filing   For this purpose, unearned income includes only amounts the child must include in total income. H&r block online filing Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. H&r block online filing Income from property received as a gift. H&r block online filing   A child's unearned income includes all income produced by property belonging to the child. H&r block online filing 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. H&r block online filing   A child's unearned income includes income produced by property given as a gift to the child. H&r block online filing This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. H&r block online filing Example. H&r block online filing Amanda Black, age 13, received the following income. H&r block online filing 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. H&r block online filing Amanda's unearned income is $2,100. H&r block online filing This is the total of the dividends ($800), taxable interest ($1,200), and net capital gains ($100). H&r block online filing Her wages are earned (not unearned) income because they are received for work actually done. H&r block online filing Her tax-exempt interest is not included because it is nontaxable. H&r block online filing Trust income. H&r block online filing   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. H&r block online filing   However, for purposes of completing Form 8615, a taxable distribution from a qualified disability trust is considered earned income, not unearned income. H&r block online filing Line 2 (deductions). H&r block online filing   If the child does not itemize deductions on Schedule A (Form 1040), enter $2,000 on line 2. H&r block online filing   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. H&r block online filing Directly connected. H&r block online filing   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. H&r block online filing These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. H&r block online filing   These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). H&r block online filing Only the amount greater than 2% of the child's adjusted gross income can be deducted. H&r block online filing See chapter 28 for more information. H&r block online filing Example 1. H&r block online filing 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. H&r block online filing His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. H&r block online filing 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. H&r block online filing Example 2. H&r block online filing Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. H&r block online filing She has no other income. H&r block online filing She has itemized deductions of $1,050 (net of the 2% limit) that are directly connected with the production of her unearned income. H&r block online filing Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). H&r block online filing The amount on line 2 is $2,050. H&r block online filing This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. H&r block online filing Line 3. H&r block online filing   Subtract line 2 from line 1 and enter the result on this line. H&r block online filing If zero or less, do not complete the rest of the form. H&r block online filing However, you must still attach Form 8615 to the child's tax return. H&r block online filing Figure the tax on the child's taxable income in the normal manner. H&r block online filing Line 4 (child's taxable income). H&r block online filing   Enter on line 4 the child's taxable income from Form 1040, line 43, or Form 1040A, line 27. H&r block online filing   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. H&r block online filing 929. H&r block online filing Line 5 (net unearned income). H&r block online filing   A child's net unearned income cannot be more than his or her taxable income. H&r block online filing Enter on Form 8615, line 5, the smaller of line 3 or line 4. H&r block online filing This is the child's net unearned income. H&r block online filing   If zero or less, do not complete the rest of the form. H&r block online filing However, you must still attach Form 8615 to the child's tax return. H&r block online filing Figure the tax on the child's taxable income in the normal manner. H&r block online filing Step 2. H&r block online filing 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. H&r block online filing 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. H&r block online filing 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. H&r block online filing For example, do not refigure the medical expense deduction. H&r block online filing Figure the tentative tax on Form 8615, lines 6 through 13. H&r block online filing Note. H&r block online filing If the child or parent has any capital gains or losses, get Publication 929 for help in completing Form 8615, Part II. H&r block online filing Line 6 (parent's taxable income). H&r block online filing   Enter on line 6 the parent's taxable income from Form 1040, line 43, Form 1040A, line 27, or Form 1040EZ, line 6. H&r block online filing   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. H&r block online filing Line 7 (net unearned income of other children). H&r block online filing   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. H&r block online filing Do not include the amount from line 5 of the Form 8615 being completed. H&r block online filing Example. H&r block online filing Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. H&r block online filing 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. H&r block online filing Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). H&r block online filing Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). H&r block online filing Other children's information not available. H&r block online filing   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. H&r block online filing See Parent's return information not known timely , earlier. H&r block online filing Line 11 (tentative tax). H&r block online filing   Subtract line 10 from line 9 and enter the result on this line. H&r block online filing This is the tentative tax. H&r block online filing   If line 7 is blank, skip lines 12a and 12b and enter the amount from line 11 on line 13. H&r block online filing Also skip the discussion for lines 12a and 12b that follows. H&r block online filing Lines 12a and 12b (dividing the tentative tax). H&r block online filing   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. H&r block online filing This is done on lines 12a, 12b, and 13. H&r block online filing Add the amount on line 7 to the amount on line 5 and enter the total on line 12a. H&r block online filing Divide the amount on line 5 by the amount on line 12a and enter the result, as a decimal, on line 12b. H&r block online filing Example. H&r block online filing In the earlier example under Line 7 (net unearned income of other children), Sharon's Form 8615 shows $1,600 on line 7. H&r block online filing The amount entered on line 12a is $2,400, the total of the amounts on lines 5 and 7 ($800 + $1,600). H&r block online filing The decimal on line 12b is  . H&r block online filing 333, figured as follows and rounded to three places. H&r block online filing   $800 = . H&r block online filing 333     $2,400   Step 3. H&r block online filing 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. H&r block online filing This is the child's tax. H&r block online filing It is figured on Form 8615, lines 14 through 18. H&r block online filing Alternative minimum tax. H&r block online filing   A child may be subject to alternative minimum tax (AMT) if he or she has certain items given preferential treatment under the tax law. H&r block online filing See Alternative Minimum Tax (AMT) in chapter 30. H&r block online filing    For more information on who is liable for AMT and how to figure it, see Form 6251, Alternative Minimum Tax—Individuals. H&r block online filing 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. H&r block online filing Prev  Up  Next   Home   More Online Publications