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State free file Publication 4492-B - Additional Material Prev  Up  Next   Home   More Online Publications
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IRS Offers New Streamlined Option to Certain 501(c)(4) Groups Caught in Application Backlog

FS-2013-8, June 2013

Following a review of internal procedures to reduce the backlog of tax-exempt applications, the IRS is offering certain organizations that have applied for 501(c)(4) status a faster, optional method to gain tax-exempt status.

The IRS will start mailing about 80 letters this week offering the expedited option to groups that have had their applications pending for more than 120 days and involve possible political campaign intervention or issue advocacy. This effort is part of an internal review of IRS operations, processes and practices at the IRS announced today.

“The IRS is committed to improving our tax-exempt review process,” said IRS Principal Deputy Commissioner Danny Werfel. “This new streamlined option gives certain groups that have waited far too long a quick and clear path to get their status resolved.”

This “safe-harbor” option will provide certain groups an approved determination letter granting them 501(c)(4) status within two weeks if they certify they devote 60 percent or more of both their spending and time on activities that promote social welfare as defined by Section 501(c)(4). At the same time, they must certify that political campaign intervention involves less than 40 percent of both their spending and time. These thresholds apply for past, current and future years of operation. Solely for the purpose of determining eligibility for the expedited procedure, an organization must count, among other things, any public communication identifying a candidate that occurred within 60 days prior to a general election or 30 days prior to a primary as political campaign intervention.

 “The IRS will treat these groups fairly and review applications promptly, a step that will immediately reduce the backlog of these cases,” Werfel said. “At the same time, the IRS will work to ensure 501(c)(4) groups follow the law set by Congress. As part of our efforts, the IRS will continue to look for ways to improve its processes going forward.”

The IRS also emphasized that any eligible organizations that do not choose the expedited option will be treated fairly and expeditiously through the regular review process.

Full details of the expedited process and specific instructions for the groups qualifying for the option can be found in IRS Letter 5228.

Related Item: New Review Process and Expedited Self-Certification Option

 

Page Last Reviewed or Updated: 19-Dec-2013

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State free file Publication 929 - Main Content Table of Contents Part 1. State free file Rules for All Dependents Filing RequirementsEarned Income Only Unearned Income Only Both Earned and Unearned Income Other Filing Requirements Should a Return Be Filed Even If Not Required? Responsibility for Child's ReturnThird party designee. State free file Designated as representative. State free file IRS notice. State free file Standard DeductionStandard Deduction of Zero Dependent's Own Exemption Withholding From WagesExceptions. State free file Part 2. State free file Tax on Unearned Income of Certain ChildrenWhich Parent's Return To Use 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. State free file Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. State free file Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. State free file Figuring the Child's Tax (Form 8615, Part III) Alternative Minimum Tax Illustrated Example Part 1. State free file Rules for All Dependents This part of the publication discusses the filing requirements for dependents, who is responsible for a child's return, how to figure a dependent's standard deduction and exemption (if any), and whether a dependent can claim exemption from federal income tax withholding. State free file Filing Requirements Whether a dependent has to file a return generally depends on the amount of the dependent's earned and unearned income and whether the dependent is married, is age 65 or older, or is blind. State free file A dependent may have to file a return even if his or her income is less than the amount that would normally require a return. State free file See Other Filing Requirements, later. State free file The following sections apply to dependents with: Earned income only, Unearned income only, and Both earned and unearned income. State free file  To find out whether a dependent must file, read the section that applies, or use Table 1. State free file Earned Income Only A dependent whose gross income is only earned income must file a return if the gross income is more than the amount listed in the following table. State free file Marital Status Amount Single   Under 65 and not blind $6,100 Either 65 or older or blind $7,600 65 or older and blind $9,100 Married*   Under 65 and not blind $6,100 Either 65 or older or blind $7,300 65 or older and blind $8,500 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). State free file Example. State free file William is 16. State free file His mother claims an exemption for him on her income tax return. State free file He worked part time on weekends during the school year and full time during the summer. State free file He earned $7,000 in wages. State free file He did not have any unearned income. State free file He must file a tax return because he has earned income only and his gross income is more than $6,100. State free file If he is blind, he does not have to file a return because his gross income is not more than $7,600. State free file Unearned Income Only A dependent whose gross income is only unearned income must file a return if the gross income is more than the amount listed in the following table. State free file Marital Status Amount Single   Under 65 and not blind $1,000 Either 65 or older or blind $2,500 65 or older and blind $4,000 Married*   Under 65 and not blind $1,000 Either 65 or older or blind $2,200 65 or older and blind $3,400 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). State free file Example. State free file Sarah is 18 and single. State free file Her parents can claim an exemption for her on their income tax return. State free file She received $1,970 of taxable interest and dividend income. State free file She did not work during the year. State free file She must file a tax return because she has unearned income only and her gross income is more than $1,000. State free file If she is blind, she does not have to file a return because she has unearned income only and her gross income is not more than $2,500. State free file Election to report child's unearned income on parent's return. State free file   A parent of a child under age 19 (or under age 24 if a full-time student) may be able to elect to include the child's interest and dividend income on the parent's return. State free file See Parent's Election To Report Child's Interest and Dividends in Part 2. State free file If the parent makes this election, the child does not have to file a return. State free file Both Earned and Unearned Income A dependent who has both earned and unearned income generally must file a return if the dependent's gross income is more than line 5 of the following worksheet. State free file Filing Requirement Worksheet for Most Dependents 1. State free file Enter dependent's earned income plus $350     2. State free file Minimum amount   $1,000 3. State free file Compare lines 1 and 2. State free file Enter the larger amount     4. State free file Maximum amount   6,100 5. State free file Compare lines 3 and 4. State free file Enter the smaller amount     6. State free file Enter the dependent's gross income. State free file If line 6 is more than line 5, the dependent must file an income tax return. State free file If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. State free file       Table 1. State free file 2013 Filing Requirements for Dependents If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a return. State free file   See the definitions of “dependent,”“earned income,”“unearned income,” and “gross income” in the Glossary. State free file   Single dependents—Were you either age 65 or older or blind?     No. State free file You must file a return if any of the following apply. State free file       Your unearned income was over $1,000. State free file Your earned income was over $6,100. State free file Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. State free file         Yes. State free file You must file a return if any of the following apply. State free file     Your unearned income was over $2,500 ($4,000 if 65 or older and blind), Your earned income was over $7,600 ($9,100 if 65 or older and blind), Your gross income was more than the larger of—       $2,500 ($4,000 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,850 ($3,350 if 65 or older and blind). State free file       Married dependents—Were you either age 65 or older or blind?     No. State free file You must file a return if any of the following apply. State free file       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. State free file Your unearned income was over $1,000. State free file Your earned income was over $6,100. State free file Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. State free file       Yes. State free file You must file a return if any of the following apply. State free file       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. State free file Your unearned income was over $2,200 ($3,400 if 65 or older and blind), Your earned income was over $7,300 ($8,500 if 65 or older and blind), Your gross income was more than the larger of—       $2,200 ($3,400 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,550 ($2,750 if 65 or older and blind). State free file       Example 1. State free file Joe is 20, single, not blind, and a full-time college student. State free file He does not provide more than half of his own support, and his parents claim an exemption for him on their income tax return. State free file He received $200 taxable interest income and earned $2,750 from a part-time job. State free file He does not have to file a tax return because his gross income of $2,950 ($200 interest plus $2,750 in wages) is not more than $3,100, the amount on line 5 of his filled-in Filing Requirement Worksheet for Most Dependents (shown next). State free file Filled-in Example 1 Filing Requirement Worksheet  for Most Dependents 1. State free file Enter dependent's earned income plus $350   $ 3,100 2. State free file Minimum amount   1,000 3. State free file Compare lines 1 and 2. State free file Enter the larger amount   3,100 4. State free file Maximum amount   6,100 5. State free file Compare lines 3 and 4. State free file Enter the smaller amount   3,100 6. State free file Enter the dependent's gross income. State free file If line 6 is more than line 5, the dependent must file an income tax return. State free file If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. State free file   $ 2,950   Example 2. State free file The facts are the same as in Example 1 except that Joe had $600 taxable interest income. State free file He must file a tax return because his gross income of $3,350 ($600 interest plus $2,750 wages) is more than $3,100, the amount on line 5 of his filled-in worksheet (shown next). State free file Filled-in Example 2 Filing Requirement Worksheet for Most Dependents 1. State free file Enter dependent's earned income plus $350   $ 3,100 2. State free file Minimum amount   1,000 3. State free file Compare lines 1 and 2. State free file Enter the larger amount   3,100 4. State free file Maximum amount   6,100 5. State free file Compare lines 3 and 4. State free file Enter the smaller amount   3,100 6. State free file Enter the dependent's gross income. State free file If line 6 is more than line 5, the dependent must file an income tax return. State free file If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. State free file   $ 3,350   Age 65 or older or blind. State free file A dependent who is age 65 or older or blind must file a return if his or her gross income is more than line 7 of the following worksheet. State free file Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. State free file Enter dependent's earned income plus $350     2. State free file Minimum amount   $1,000 3. State free file Compare lines 1 and 2. State free file Enter the larger amount     4. State free file Maximum amount   6,100 5. State free file Compare lines 3 and 4. State free file Enter the smaller amount     6. State free file Enter the amount from the following table that applies to the dependent       Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. State free file Add lines 5 and 6. State free file Enter the total     8. State free file Enter the dependent's gross income. State free file If line 8 is more than line 7, the dependent must file an income tax return. State free file If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more     Example 3. State free file The facts are the same as in Example 2 except that Joe is also blind. State free file He does not have to file a return because his gross income of $3,350 is not more than $4,600, the amount on line 7 of his filled-in Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or Blind (shown next). State free file   Filled-in Example 3 Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. State free file Enter dependent's earned income plus $350   $3,100 2. State free file Minimum amount   1,000 3. State free file Compare lines 1 and 2. State free file Enter the larger amount   3,100 4. State free file Maximum amount   6,100 5. State free file Compare lines 3 and 4. State free file Enter the smaller amount   3,100 6. State free file Enter the amount from the following table that applies to the dependent   1,500   Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. State free file Add lines 5 and 6. State free file Enter the total   4,600 8. State free file Enter the dependent's gross income. State free file If line 8 is more than line 7, the dependent must file an income tax return. State free file If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more   $3,350 Other Filing Requirements Some dependents may have to file a tax return even if their income is less than the amount that would normally require them to file a return. State free file A dependent must file a tax return if he or she owes any other taxes, such as: Social security and Medicare taxes on tips not reported to his or her employer or on wages received from an employer who did not withhold these taxes, Uncollected social security and Medicare or railroad retirement taxes on tips reported to his or her employer or on group-term life insurance, Alternative minimum tax, Additional tax on a health savings account from Form 8889, Part III, Recapture taxes, such as the tax from recapture of an education credit, or Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. State free file But if the dependent is filing a return only because of this tax, the dependent can file Form 5329 by itself. State free file A dependent must also file a tax return if he or she: Had wages of $108. State free file 28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or Had net earnings from self-employment of at least $400. State free file Spouse itemizes. State free file   A dependent must file a return if the dependent's spouse itemizes deductions on a separate return and the dependent has $5 or more of gross income (earned and/or unearned). State free file Should a Return Be Filed Even If Not Required? Even if a dependent does not meet any of the filing requirements discussed earlier, he or she should file a tax return if either of the following applies. State free file Income tax was withheld from his or her income. State free file He or she qualifies for the earned income credit, additional child tax credit, health coverage tax credit, or refundable American opportunity education credit. State free file See the tax return instructions to find out who qualifies for these credits. State free file  By filing a return, the dependent can get a refund. State free file Responsibility for Child's Return Generally, a child is responsible for filing his or her own tax return and for paying any tax, penalties, or interest on that return. State free file If a child cannot file his or her own return for any reason, such as age, the child's parent, guardian, or other legally responsible person must file it for the child. State free file Signing the child's return. State free file   If the child cannot sign his or her return, a parent or guardian must sign the child's name followed by the words “By (signature), parent (or guardian) for minor child. State free file ” Authority of parent or guardian. State free file   A parent or guardian who signs a return on a child's behalf can deal with the IRS on all matters connected with the return. State free file   In general, a parent or guardian who does not sign the child's return can only provide information concerning the child's return and pay the child's tax. State free file That parent or guardian is not entitled to receive information from the IRS or legally bind the child to a tax liability arising from the return. State free file Third party designee. State free file   A child's parent or guardian who does not sign the child's return may be authorized, as a third party designee, to discuss the processing of the return with the IRS as well as provide information concerning the return. State free file The child or the person signing the return on the child's behalf must check the “Yes” box in the “Third Party Designee” area of the return and name the parent or guardian as the designee. State free file   If designated, a parent or guardian can respond to certain IRS notices and receive information about the processing of the return and the status of a refund or payment. State free file This designation does not authorize the parent or guardian to receive any refund check, bind the child to any tax liability, or otherwise represent the child before the IRS. State free file See the return instructions for more information. State free file Designated as representative. State free file   A parent or guardian who does not sign the child's return may be designated as the child's representative by the child or the person signing the return on the child's behalf. State free file Form 2848, Power of Attorney and Declaration of Representative, is used to designate a child's representative. State free file See Publication 947, Practice Before the IRS and Power of Attorney, for more information. State free file   If designated, a parent or guardian can receive information about the child's return but cannot legally bind the child to a tax liability unless authorized to do so by the law of the state in which the child lives. State free file IRS notice. State free file   If you or the child receives a notice from the IRS concerning the child's return or tax liability, you should immediately inform the IRS that the notice concerns a child. State free file The notice will show who to contact. State free file The IRS will try to resolve the matter with the parent(s) or guardian(s) of the child consistent with their authority. State free file Child's earnings. State free file   For federal income tax purposes, amounts a child earns by performing services are included in the gross income of the child and not the gross income of the parent. State free file This is true even if, under state law, the parent has the right to the earnings and may actually have received them. State free file If the child does not pay the tax due on this income, the parent may be liable for the tax. State free file Child's expenses. State free file   Deductions for payments that are made out of a child's earnings are the child's, even if the payments are made by the parent. State free file Example. State free file You made payments on your child's behalf that are deductible as a business expense and a charitable contribution. State free file You made the payments out of your child's earnings. State free file These items can be deducted only on the child's return. State free file Standard Deduction The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the larger of: $1,000, or The individual's earned income plus $350, but not more than the regular standard deduction (generally $6,100). State free file However, the standard deduction may be higher for a dependent who: Is 65 or older, or Is blind. State free file Certain dependents cannot claim any standard deduction. State free file See Standard Deduction of Zero , later. State free file Worksheet 1. State free file   Use Worksheet 1 to figure the dependent's standard deduction. State free file Worksheet 1. State free file Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse, if filing jointly) as a dependent. State free file If you were 65 or older and/or blind, check the correct number of boxes below. State free file Put the total number of boxes checked in box c and go to line 1. State free file a. State free file You 65 or older   Blind   b. State free file Your spouse, if claiming  spouse's exemption 65 or older   Blind   c. State free file Total boxes checked         1. State free file Enter your earned income (defined below) plus $350. State free file If none, enter -0-. State free file 1. State free file     2. State free file Minimum amount. State free file   2. State free file $1,000   3. State free file Compare lines 1 and 2. State free file Enter the larger of the two amounts here. State free file 3. State free file     4. State free file Enter on line 4 the amount shown below for your filing status. State free file       Single or Married filing separately—$6,100 Married filing jointly—$12,200 Head of household—$8,950 4. State free file     5. State free file Standard deduction. State free file         a. State free file Compare lines 3 and 4. State free file Enter the smaller amount here. State free file If under 65 and not blind, stop here. State free file This is your standard deduction. State free file Otherwise, go on to line 5b. State free file 5a. State free file     b. State free file If 65 or older or blind, multiply $1,500 ($1,200 if married) by the number in box c above. State free file Enter the result here. State free file 5b. State free file     c. State free file Add lines 5a and 5b. State free file This is your standard deduction for 2013. State free file 5c. State free file     Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. State free file It also includes any amount received as a scholarship that you must include in income. State free file   Example 1. State free file Michael is single, age 15, and not blind. State free file His parents can claim him as a dependent on their tax return. State free file He has taxable interest income of $800 and wages of $150. State free file He enters $500 (his earned income plus $350) on line 1 of Worksheet 1. State free file On line 3, he enters $1,000, the larger of $500 or $1,000. State free file Michael enters $6,100 on line 4. State free file On line 5a, he enters $1,000, the smaller of $1,000 or $6,100. State free file His standard deduction is $1,000. State free file Example 2. State free file Judy, a full-time student, is single, age 22, and not blind. State free file Her parents can claim her as a dependent on their tax return. State free file She has dividend income of $275 and wages of $2,500. State free file She enters $2,850 (her earned income plus $350) on line 1 of Worksheet 1. State free file On line 3, she enters $2,850, the larger of $2,850 or $1,000. State free file She enters $6,100 on line 4. State free file On line 5a, she enters $2,850 (the smaller of $2,850 or $6,100) as her standard deduction. State free file Example 3. State free file Amy, who is single, is claimed as a dependent on her parents' tax return. State free file She is 18 years old and blind. State free file She has taxable interest income of $1,000 and wages of $2,000. State free file She enters $2,350 (her earned income plus $350) on line 1 of Worksheet 1. State free file She enters $2,350 (the larger of $2,350 or $1,000) on line 3, $6,100 on line 4, and $2,350 (the smaller of $2,350 or $6,100) on line 5a. State free file Because Amy is blind, she checks the box for blindness and enters “1” in box c at the top of Worksheet 1. State free file She enters $1,500 (the number in box c times $1,500) on line 5b. State free file Her standard deduction on line 5c is $3,850 ($2,350 + $1,500). State free file Standard Deduction of Zero The standard deduction for the following dependents is zero. State free file A married dependent filing a separate return whose spouse itemizes deductions. State free file A dependent who files a return for a period of less than 12 months due to a change in his or her annual accounting period. State free file A nonresident or dual-status alien dependent, unless the dependent is married to a U. State free file S. State free file citizen or resident alien at the end of the year and chooses to be treated as a U. State free file S. State free file resident for the year. State free file See Publication 519, U. State free file S. State free file Tax Guide for Aliens, for information on making this choice. State free file Example. State free file Jennifer, who is a dependent of her parents, is entitled to file a joint return with her husband. State free file However, her husband elects to file a separate return and itemize his deductions. State free file Because he itemizes, Jennifer's standard deduction on her return is zero. State free file She can, however, itemize any of her allowable deductions. State free file Dependent's Own Exemption A person who can be claimed as a dependent on another taxpayer's return cannot claim his or her own exemption. State free file This is true even if the other taxpayer does not actually claim the exemption. State free file Example. State free file James and Barbara can claim their child, Ben, as a dependent on their return. State free file Ben is a college student who works during the summer and must file a tax return. State free file Ben cannot claim his own exemption on his return. State free file This is true even if James and Barbara do not claim him as a dependent on their return. State free file Withholding From Wages Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. State free file If the employee claims exemption from withholding on Form W-4, the employer will not withhold federal income tax. State free file The exemption from withholding does not apply to social security and Medicare taxes. State free file Conditions for exemption from withholding. State free file   An employee can claim exemption from withholding for 2014 only if he or she meets both of the following conditions. State free file For 2013, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability. State free file For 2014, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability. State free file Dependents. State free file   An employee who is a dependent ordinarily cannot claim exemption from withholding if both of the following are true. State free file The employee's gross income will be more than $1,000, the minimum standard deduction for 2014. State free file The employee's unearned income will be more than $350. State free file Exceptions. State free file   An employee may be able to claim exemption from withholding even if the employee is a dependent, if the employee: Is age 65 or older, Is blind, or Will claim on his or her 2014 tax return: Adjustments to income, Tax credits, or Itemized deductions. State free file The above exceptions do not apply to supplemental wages greater than $1,000,000. State free file For more information, see Exemption From Withholding in chapter 1 of Publication 505. State free file Example. State free file Guy is 17 and a student. State free file During the summer he works part time at a grocery store. State free file He expects to earn about $1,200 this year. State free file He also worked at the store last summer and received a refund of all his withheld income tax because he did not have a tax liability. State free file The only other income he expects during the year is $375 interest on a savings account. State free file He expects that his parents will be able to claim him as a dependent on their tax return. State free file He is not blind and will not claim adjustments to income, itemized deductions, a higher standard deduction, or tax credits on his return. State free file Guy cannot claim exemption from withholding when he fills out Form W-4 because his parents will be able to claim him as a dependent, his gross income will be more than $1,000 (the minimum standard deduction amount) and his unearned income will be more than $350. State free file Claiming exemption from withholding. State free file    To claim exemption from withholding, an employee must enter “Exempt” in the space provided on Form W-4, line 7. State free file The employee must complete the rest of the form, as explained in the form instructions, and give it to his or her employer. State free file Renewing an exemption from withholding. State free file   An exemption from withholding is good for only one year. State free file An employee must file a new Form W-4 by February 15 each year to continue the exemption. State free file Part 2. State free file Tax on Unearned Income of Certain Children The two rules that follow may affect the tax on the unearned income of certain children. State free file 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. State free file (See Parent's Election To Report Child's Interest and Dividends , later. State free file ) 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. State free file (See Tax for Certain Children Who Have Unearned Income , later. State free file ) For these rules, the term “child” includes a legally adopted child and a stepchild. State free file These rules apply whether or not the child is a dependent. State free file These rules do not apply if neither of the child's parents were living at the end of the year. State free file 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. State free file 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 . State free file 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. State free file Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . State free file Parents are married. State free file   If the child's parents file separate returns, use the return of the parent with the greater taxable income. State free file Parents not living together. State free file   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. State free file If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. State free file   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in Publication 501. State free file Parents are divorced. State free file   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. State free file Custodial parent remarried. State free file   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. State free file Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. State free file Do not use the return of the noncustodial parent. State free file   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. State free file If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. State free file Parents never married. State free file   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. State free file If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. State free file Widowed parent remarried. State free file   If a widow or widower remarries, the new spouse is treated as the child's other parent. State free file The rules explained earlier under Custodial parent remarried apply. State free file 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. State free file If you do, your child will not have to file a return. State free file You can make this election only if all the following conditions are met. State free file Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. State free file Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). State free file The child's gross income was less than $10,000. State free file The child is required to file a return unless you make this election. State free file The child does not file a joint return for the year. State free file 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. State free file No federal income tax was withheld from your child's income under the backup withholding rules. State free file You are the parent whose return must be used when applying the special tax rules for children. State free file (See Which Parent's Return To Use , earlier. State free file ) These conditions are also shown in Figure 1. State free file Certain January 1 birthdays. State free file   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. State free file You cannot make this election for such a child unless the child was a full-time student. State free file   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. State free file You cannot make this election for such a child. State free file How to make the election. State free file    Make the election by attaching Form 8814 to your Form 1040 or Form 1040NR. State free file (If you make this election, you cannot file Form 1040A or Form 1040EZ. State free file ) Attach a separate Form 8814 for each child for whom you make the election. State free file You can make the election for one or more children and not for others. State free file Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. State free file Rate may be higher. State free file   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. State free file This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. State free file 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. State free file Deductions you cannot take. State free file   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. State free file The additional standard deduction if the child is blind. State free file The deduction for a penalty on an early withdrawal of your child's savings. State free file Itemized deductions (such as your child's investment expenses or charitable contributions). State free file Figure 1. State free file Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. State free file Figure 1. State free file Can You Include Your Child's Income On Your Tax Return? Deductible investment interest. State free file   If you use Form 8814, your child's unearned income is considered your unearned income. State free file To figure the limit on your deductible investment interest, add the child's unearned income to yours. State free file However, if your child received qualified dividends, capital gain distributions, or Alaska Permanent Fund dividends, see chapter 3 of Publication 550 for information about how to figure the limit. State free file Alternative minimum tax. State free file    If your child received tax-exempt interest (or exempt-interest dividends paid by a regulated investment company) from certain private activity bonds, you must determine if that interest is a tax preference item for alternative minimum tax (AMT) purposes. State free file If it is, you must include it with your own tax preference items when figuring your AMT. State free file See Form 6251, Alternative Minimum Tax—Individuals, and its instructions for details. State free file Reduced deductions or credits. State free file   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return, including the following. State free file Deduction for contributions to a traditional individual retirement arrangement (IRA). State free file Deduction for student loan interest. State free file Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. State free file Credit for child and dependent care expenses. State free file Child tax credit. State free file Education tax credits. State free file Earned income credit. State free file Penalty for underpayment of estimated tax. State free file   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. State free file 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. State free file Get Publication 505 for more information. State free file Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. State free file Only the amount over $2,000 is added to your income. State free file The amount over $2,000 is shown on Form 8814, line 6. State free file Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. State free file Include the amount from Form 8814, line 12, on Form 1040 or Form 1040NR, line 21. State free file If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040 or Form 1040NR, line 21. State free file On the dotted line next to line 21, enter “Form 8814” and the total of the Form 8814, line 12 amounts. State free file Note. State free file The tax on the first $2,000 is figured on Form 8814, Part II. State free file See Figuring Additional Tax , later. State free file Qualified dividends. State free file   Enter on Form 8814, line 2a, any ordinary dividends your child received. State free file This amount may include qualified dividends. State free file Qualified dividends are those dividends reported on Form 1040, line 9b, or Form 1040NR, line 10b, and are eligible for lower tax rates that apply to a net capital gain. State free file For detailed information about qualified dividends, see Publication 550. State free file   If your child received qualified dividends, the amount of these dividends that is added to your income must be reported on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. State free file You do not include these dividends on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. State free file   Enter the child's qualified dividends on Form 8814, line 2b. State free file But do not include this amount on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. State free file Instead, include the amount from Form 8814, line 9, on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. State free file (The amount on Form 8814, line 9, may be less than the amount on Form 8814, line 2b, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. State free file ) Capital gain distributions. State free file   Enter on Form 8814, line 3, any capital gain distributions your child received. State free file The amount of these distributions that is added to your income must be reported on Schedule D (Form 1040), line 13, or, if you are not required to file Schedule D, on Form 1040, line 13, or Form 1040NR, line 14. State free file You do not include it on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. State free file   Include the amount from Form 8814, line 10, on Schedule D, line 13; Form 1040, line 13; or Form 1040NR, line 14, whichever applies. State free file (The amount on Form 8814, line 10, may be less than the amount on Form 8814, line 3, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. State free file ) Collectibles (28% rate) gain. State free file    If any of the child's capital gain distributions are reported on Form 1099-DIV as collectibles (28% rate) gain, you must determine how much to also include on line 4 of the 28% Rate Gain Worksheet, in the instructions for Schedule D, line 18. State free file Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. State free file The numerator is the part of the child's total capital gain distribution that is collectibles (28% rate) gain. State free file The denominator is the child's total capital gain distribution. State free file Enter the result on line 4 of the 28% Rate Gain Worksheet. State free file Unrecaptured section 1250 gain. State free file   If any of the child's capital gain distributions are reported on Form 1099-DIV as unrecaptured section 1250 gain, you must determine how much to include on line 11 of the Unrecaptured Section 1250 Gain Worksheet in the instructions for Schedule D, line 19. State free file Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. State free file The numerator is the part of the child's total capital gain distribution that is unrecaptured section 1250 gain. State free file The denominator is the child's total capital gain distribution. State free file Enter the result on the Unrecaptured Section 1250 Gain Worksheet, line 11. State free file Section 1202 gain. State free file   If any of the child's capital gain distributions are reported as section 1202 gain (gain on qualified small business stock) on Form 1099-DIV, part or all of that gain may be eligible for the section 1202 exclusion. State free file (For information about the exclusion, see chapter 4 of Publication 550. State free file ) To figure that part, multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. State free file The numerator is the part of the child's total capital gain distribution that is section 1202 gain. State free file The denominator is the child's total capital gain distribution. State free file Your section 1202 exclusion is generally 50% of the result, but may be subject to a limit. State free file In some cases, the exclusion is more than 50%. State free file See the instructions for Schedule D for details and information on how to report the exclusion amount. State free file Example. State free file Fred is 6 years old. State free file In 2013, he received dividend income of $2,100, which included $1,575 of ordinary dividends and a $525 capital gain distribution from a mutual fund. State free file (None of the distributions were reported on Form 1099-DIV as unrecaptured section 1250 gain, section 1202 gain, or collectibles (28% rate) gain. State free file ) All of the ordinary dividends are qualified dividends. State free file He has no other income and is not subject to backup withholding. State free file No estimated tax payments were made under his name and social security number. State free file Fred's parents elect to include Fred's income on their tax return instead of filing a return for him. State free file They figure the amount to report on Form 1040, lines 9a and 9b, the amount to report on their Schedule D, line 13, and the amount to report on Form 1040, line 21, as follows. State free file They leave lines 1a and 1b of Form 8814 blank because Fred does not have any interest income. State free file They enter his ordinary dividends of $1,575 on lines 2a and 2b because all of Fred's ordinary dividends are qualified dividends. State free file They enter the amount of Fred's capital gain distributions, $525, on line 3. State free file Next, they add the amounts on lines 1a, 2a, and 3 and enter the result, $2,100, on line 4. State free file They subtract the base amount on line 5, $2,000, from the amount on line 4, $2,100, and enter the result, $100, on line 6. State free file This is the total amount from Form 8814 to be reported on their return. State free file Next, they figure how much of this amount is qualified dividends and how much is capital gain distributions. State free file They divide the amount on line 2b, $1,575, by the amount on line 4, $2,100. State free file They enter the result, . State free file 75, on line 7. State free file They divide the amount on line 3, $525, by the amount on line 4, $2,100. State free file They enter the result, . State free file 25, on line 8. State free file They multiply the amount on line 6, $100, by the decimal on line 7, . State free file 75, and enter the result, $75, on line 9. State free file They multiply the amount on line 6, $100, by the decimal on line 8, . State free file 25, and enter the result, $25, on line 10. State free file They include the amount from line 9, $75, on lines 9a and 9b of their Form 1040 and enter “Form 8814 – $75” on the dotted lines next to lines 9a and 9b. State free file They include the amount from line 10, $25, on line 13 of their Schedule D (Form 1040) and enter “Form 8814 – $25” on the dotted line next to Schedule D, line 13. State free file They enter $100 ($75 + $25) on line 11 and -0- ($100 – $100) on line 12. State free file Because the amount on line 12 is -0-, they do not include any amount from Form 8814 on their Form 1040, line 21. State free file 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. State free file This tax is added to the tax figured on your income. State free file This additional tax is the smaller of: 10% x (your child's gross income − $1,000), or $100. State free file Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44, or Form 1040NR, line 42. State free file Check box a on Form 1040, line 44, or Form 1040NR, line 42. State free file 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. State free file 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. State free file Attach the completed form to the child's Form 1040, Form 1040A, or Form 1040NR. State free file When Form 8615 must be filed. State free file   Form 8615 must be filed for a child if all of the following statements are true. State free file The child's unearned income was more than $2,000. State free file The child is required to file a return for 2013. State free file 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. State free file At least one of the child's parents was alive at the end of 2013. State free file The child does not file a joint return for 2013. State free file These conditions are also shown in Figure 2. State free file Certain January 1 birthdays. State free file   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. State free file IF a child was born on. State free file . State free file . State free file THEN, at the end of 2013, the child is considered to be. State free file . State free file . State free file January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. State free file The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. State free file  **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. State free file  ***Do not use Form 8615 for this child. State free file Figure 2. State free file Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. State free file Figure 2. State free file Do You Have To Use Form 8615 To Figure Your Child's Tax? Providing Parental Information (Form 8615, Lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. State free file (If the parents filed a joint return, enter the name and social security number listed first on the joint return. State free file ) On line C, check the box for the parent's filing status. State free file See Which Parent's Return To Use, earlier, for information on which parent's return information must be used on Form 8615. State free file Parent with different tax year. State free file   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. State free file Example. State free file Kimberly must use her mother's tax and taxable income to complete her Form 8615 for calendar year 2013 (January 1 – December 31). State free file Kimberly's mother files her tax return on a fiscal year basis (July 1 – June 30). State free file Kimberly must use the information on her mother's return for the tax year ending June 30, 2013, to complete her 2013 Form 8615. State free file Parent's return information not known timely. State free file   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. State free file   You can use any reasonable estimate. State free file This includes using information from last year's return. State free file If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. State free file   When you get the correct information, file an amended return on Form 1040X, Amended U. State free file S. State free file Individual Income Tax Return. State free file Extension of time to file. State free file   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. State free file S. State free file Individual Income Tax Return. State free file See the instructions for Form 4868 for details. State free file    An extension of time to file is not an extension of time to pay. State free file You must make an accurate estimate of the tax for 2013. State free file If you do not pay the full amount due by the regular due date, the child will owe interest and may also be charged penalties. State free file See Form 4868 and its instructions. State free file Parent's return information not available. State free file   If a child cannot get the required information about his or her parent's tax return, the child (or the child's legal representative) can request the necessary information from the Internal Revenue Service (IRS). State free file How to request. State free file   After the end of the tax year, send a signed, written request for the information to the Internal Revenue Service Center where the parent's return will be filed. State free file (The IRS cannot process a request received before the end of the tax year. State free file )    You should also consider getting an extension of time to file the child's return, because there may be a delay in getting the requested information. State free file   The request must contain all of the following. State free file A statement that you are making the request to comply with section 1(g) of the Internal Revenue Code and that you have tried to get the information from the parent. State free file Proof of the child's age (for example, a copy of the child's birth certificate). State free file Evidence the child has more than $2,000 of unearned income (for example, a copy of the child's prior year tax return or copies of Forms 1099 for the current year). State free file The name, address, social security number (if known), and filing status (if known) of the parent whose information is to be shown on Form 8615. State free file    A child's legal representative making the request should include a copy of his or her Power of Attorney, such as Form 2848, or proof of legal guardianship. State free file Step 1. State free file 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. State free file To do that, use Form 8615, Part I. State free file Line 1 (Unearned Income) If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. State free file Adjusted gross income is shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. State free file Form 1040EZ and Form 1040NR-EZ cannot be used if Form 8615 must be filed. State free file 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. State free file However, use the following worksheet if: the child has excluded any foreign earned income, deducted a loss from self-employment, or has a net operating loss from another year. State free file Alternate Worksheet for Form 8615, Line 1 A. State free file Enter the amount from the child's Form 1040, line 22, or Form 1040NR, line 23   B. State free file Enter the total of any net loss  from self-employment, any net operating loss deduction, any foreign earned income exclusion, and any foreign housing exclusion from the child's Form 1040 or Form 1040NR. State free file Enter this total as a positive number (greater than zero)   C. State free file Add line A and line B and  enter the total   D. State free file Enter the child's earned income plus any amount from the child's Form 1040, line 30, or the child's Form 1040NR, line 30     Generally, the child's earned income is the total of the amounts reported on Form 1040, lines 7, 12, and 18 (if line 12 or 18 is a loss, use zero) or Form 1040NR, lines 8, 13, and 19 (if line 13 or 19 is a loss, use zero)   E. State free file Subtract line D from line C. State free file Enter the result here and on Form 8615, line 1   Unearned income defined. State free file   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually performed. State free file It includes taxable interest, dividends, capital gains (including capital gain distributions), the taxable part of social security and pension payments, certain distributions from trusts, and unemployment compensation. State free file 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). State free file Nontaxable income. State free file   For this purpose, unearned income includes only amounts the child must include in gross income. State free file Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. State free file Capital loss. State free file   A child's capital losses are taken into account in figuring the child's unearned income. State free file Capital losses are first applied against capital gains. State free file If the capital losses are more than the capital gains, the difference (up to $3,000) is subtracted from the child's interest, dividends, and other unearned income. State free file Any difference over $3,000 is carried to the next year. State free file Income from property received as a gift. State free file   A child's unearned income includes all income produced by property belonging to the child. State free file 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. State free file   A child's unearned income includes income produced by property given as a gift to the child. State free file This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. State free file Example. State free file Amanda Black, age 13, received the following income. State free file Dividends—$800 Wages—$2,100 Taxable interest—$1,200 Tax-exempt interest—$100 Capital gains—$300 Capital losses—($200) The dividends were qualified dividends on stock given to her by her grandparents. State free file Amanda's unearned income is $2,100. State free file This is the total of the dividends ($800), taxable interest ($1,200), and capital gains reduced by capital losses ($300 − $200 = $100). State free file Her wages are earned (not unearned) income because they are received for work actually performed. State free file Her tax-exempt interest is not included because it is nontaxable. State free file Trust income. State free file   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. State free file   However, taxable distributions from a qualified disability trust are considered earned income for the purposes of completing Form 8615. State free file See the Form 8615 instructions for details. State free file Adjustment to income. State free file   In figuring the amount to enter on line 1, the child's unearned income is reduced by any penalty on the early withdrawal of savings. State free file Line 2 (Deductions) If the child does not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter $2,000 on line 2. State free file If the child itemizes 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 (or Schedule A (Form 1040NR), line 15), that are directly connected with the production of the unearned income entered on line 1, or $2,000. State free file Directly connected. State free file   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. State free file These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. State free file    These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). State free file Only the amount greater than 2% of the child's adjusted gross income can be deducted. State free file See Publication 529, Miscellaneous Deductions, for more information. State free file Example 1. State free file 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%-of-adjusted-gross-income limit) that are directly connected with his unearned income. State free file His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. State free file 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. State free file Example 2. State free file Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. State free file She has no other income. State free file She has itemized deductions of $1,050 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with the production of her unearned income. State free file Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). State free file The amount on line 2 is $2,050. State free file This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. State free file Line 3 Subtract line 2 from line 1 and enter the result on this line. State free file If zero or less, do not complete the rest of the form. State free file However, you must still attach Form 8615 to the child's tax return. State free file Figure the tax on the child's taxable income in the normal manner. State free file Line 4 (Child's Taxable Income) Enter on line 4 the child's taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. State free file Child files Form 2555 or 2555-EZ. State free file   If the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) is used to figure the child's tax. State free file Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the child's taxable income on Form 8615, line 4. State free file Line 5 (Net Unearned Income) A child's net unearned income cannot be more than his or her taxable income. State free file Enter on Form 8615, line 5, the smaller of line 3 or line 4. State free file This is the child's net unearned income. State free file If zero or less, do not complete the rest of the form. State free file However, you must still attach Form 8615 to the child's tax return. State free file Figure the tax on the child's taxable income in the normal manner. State free file Step 2. State free file Figuring a 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. State free file 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. State free file 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. State free file For example, do not refigure the medical expense deduction. State free file Figure the tentative tax on Form 8615, lines 6 through 13. State free file Line 6 (Parent's Taxable Income) Enter on line 6 the amount from the parent's Form 1040, line 43; Form 1040A, line 27; Form 1040EZ, line 6; Form 1040NR, line 41; or Form 1040NR-EZ, line 14. State free file If the parent's taxable income is zero or less, enter zero on line 6. State free file Parent files Form 2555 or 2555-EZ. State free file   If the parent files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet in the Form 1040 instructions is used to figure the parent's tax. State free file Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the parent's taxable income, on line 6 of Form 8615. State free file Line 7 (Net Unearned Income of Other Children) 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. State free file Do not include the amount from line 5 of the Form 8615 being completed. State free file (The term “other child” means any other child whose Form 8615 uses the tax information of the parent identified on Lines A and B of Form 8615. State free file ) Example. State free file Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. State free file 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. State free file Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). State free file Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). State free file Other children's information not available. State free file   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. State free file Estimates and extensions are discussed earlier under Providing Parental Information (Form 8615, Lines A–C) . State free file Line 8 (Parent's Taxable Income Plus Children's Net Unearned Income) Enter on this line the total of lines 5, 6, and 7. State free file You must determine the amount of net capital gain and qualified dividends included on this line before completing Form 8615, line 9. State free file Net capital gain. State free file   Net capital gain is the smaller of the gain, if any, on Schedule D (Form 1040), line 15, or the gain, if any, on Schedule D, line 16. State free file If Schedule D is not required, it is the amount on Form 1040, line 13; Form 1040A, line 10; or Form 1040NR, line 14. State free file Qualified dividends. State free file   Qualified dividends are those dividends reported on line 9b of Form 1040 or Form 1040A, or line 10b of Form 1040NR. State free file Net capital gain and qualified dividends on line 8. State free file   If neither the child, nor the parent, nor any other child has net capital gain, the net capital gain on line 8 is zero. State free file   If neither the child, nor the parent, nor any other child has qualified dividends, the amount of qualified dividends on line 8 is zero. State free file   If the child, parent, or any other child has net capital gain, figure the amount of net capital gain included on line 8 by adding together the net capital gain amounts included on lines 5, 6, and 7 of Form 8615. State free file   If the child, parent, or any other child has qualified dividends, figure the amount of qualified dividends included on line 8 by adding together the qualified dividend amounts included on lines 5, 6, and 7. State free file   Use the instructions for Form 8615, line 8, including the appropriate Line 5 Worksheet, to find these amounts. State free file See the instructions for Form 8615 for more details. State free file Note. State free file The amount of any net capital gain or qualified dividends is not separately reported on line 8. State free file It is  needed, however, when figuring the tax on line 9. State free file Line 9 (Tax on Parent's Taxable Income Plus Children's Net Unearned Income) Figure the tax on the amount on line 8 using the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet (in the Form 1040, 1040A, or 1040NR instructions), the Schedule D Tax Worksheet (in the Schedule D instructions), or Schedule J (Form 1040), as follows. State free file If line 8 does not include any net capital gain or qualified dividends, use the Tax Table or Tax Computation Worksheet to figure this tax. State free file But if Schedule J, Income Averaging for Farmers and Fishermen, is used to figure the tax on the parent's return, use it to figure this tax. State free file If line 8 includes any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. State free file For details, see the instructions for Form 8615, line 9. State free file However, if the child, parent, or any other child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. State free file But if Schedule J is used to figure the tax on the parent's return, use it to figure this tax. State free file Child files Form 2555 or 2555-EZ. State free file   If line 8 includes any net capital gain or qualified dividends and the child, or any other child filing Form 8615, also files Form 2555 or 2555-EZ, use Using the Schedule D Tax Worksheet for line 9 tax, next, to figure the line 9 tax. State free file Using the Schedule D Tax Worksheet for line 9 tax. State free file    Use the Schedule D Tax Worksheet (in the Schedule D instructions) to figure the line 9 tax on Form 8615 if the child, parent, or any other child has unrecaptured section 1250 gain or 28% rate gain. State free file If you must use the Schedule D Tax Worksheet, first complete any Schedule D and any actual Schedule D Tax Worksheet required for the child, parent, or any other child. State free file Then figure the line 9 tax using another Schedule D Tax Worksheet. State free file (Do not attach this Schedule D Tax Worksheet to the child's return. State free file )   Complete this Schedule D Tax Worksheet as follows. State free file On line 1, enter the amount from Form 8615, line 8. State free file On line 2, enter the qualified dividends included on Form 8615, line 8. State free file (See the earlier discussion for line 8. State free file ) On line 3, enter the total of the amounts, if any, on line 4g of all Forms 4952 filed by the child, parent, or any other child. State free file On line 4, enter the total of the amounts, if any, on line 4e of all Forms 4952 filed by the child, parent, or any other child. State free file If applicable, include instead the smaller amount entered on the dotted line next to line 4e. State free file On lines 5 and 6, follow the worksheet instructions. State free file On line 7, enter the net capital gain included on Form 8615, line 8. State free file (See the earlier discussion for line 8. State free file ) On lines 8 through 10, follow the worksheet instructions. State free file On line 11, enter zero if neither the child, nor the parent, nor any other child has unrecaptured section 1250 gain (Schedule D, line 19) or 28% rate gain (Schedule D, line 18). State free file Otherwise, enter the amount of unrecaptured section 1250 gain and 28% rate gain included in the net capital gain on line 8 of Form 8615. State free file Figure these amounts as explained later under Figuring unrecaptured section 1250 gain (line 11) and Figuring 28% rate gain (line 11). State free file If the Foreign Earned Income Tax Worksheet was used to figure the parent's tax or the tax of any child, go to step 10 below. State free file Otherwise, skip steps 10, 11, and 12 below, and go to step 13. State free file Determine whether there is a line 8 capital gain excess as follows. State free file Add the amounts on line 2 of all Foreign Earned Income Tax Worksheets completed by the parent or any child for whom Form 8615 is filed. State free file (But for each child do not add more than the excess, if any, of the amount on line 5 of the child's Form 8615 over the child's taxable income on Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. State free file ) Subtract (a) from the amount on line 1 of this Schedule D Tax Worksheet. State free file Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. State free file If the result is more than zero, that amount is the line 8 capital gain excess. State free file If the result is zero or less, there is no line 8 capital gain excess. State free file If there is no line 8 capital gain excess, skip step 12 below and go to step 13. State free file If there is a line 8 capital gain excess, complete a second Schedule D Tax Worksheet as instructed above and in step 13, but in its entirety and with the following additional modifications. State free file (These modifications are to be made only for purposes of filling out this additional Schedule D Tax Worksheet. State free file ) Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 8 capital gain excess. State free file Reduce the amount you would otherwise enter on line 6 (but not below zero) by any of the line 8 capital gain excess not used in (a) above. State free file If the child, parent, or any other child has 28% rate gain, reduce the amount you would otherwise enter on line 8 of Worksheet 1 for Line 11 of the Schedule D Tax Worksheet – 28% Rate Gain (Line 9 Tax), shown later, (but not below zero) by the line 8 capital gain excess, and refigure the amount on line 11 of this Schedule D Tax Worksheet. State free file If the child, parent, or any other child has unrecaptured section 1250 gain, reduce the amount you would otherwise enter on line 8 of Worksheet 2 for Line 11 of the Schedule D Tax Worksheet – Unrecaptured Section 1250 Gain (Line 9 Tax) (but not below zero) by the line 8 capital gain excess not used in 12(c), and refigure the amount on line 11 of this Schedule D Tax Worksheet. State free file Complete lines 12 through 45 following the worksheet instructions. State free file Use the parent's filing status to complete lines 15, 42, and 44. State free file Enter the amount from line 45 of this Schedule D Tax Worksheet on Form 8615, line 9, and check the box on that line