Publication 929 - Tax Rules For Children And Dependents

Illustrated Part I of Form 8615

Carla’s total income on Form 1040A, line 15,

line 1 of the worksheet. Her earned income

Worksheet—Line 1

is $5,000. This total includes wages (earned

of $600 (her wages as shown on line 7 of

Enter the amount from the

her Form 1040A) is entered on line 2 of the

income) of $600 reported on line 7. She has

child’s Form 1040, line 22;

no itemized deductions. Carla’s taxable

worksheet. Line 3 is the result of subtracting

Form 1040A, line 15; or Form

income on Form 1040A, line 27, is $4,100.

$600 from $5,000.

1040NR, line 23, whichever

Because Carla has earned income, the

5,000

The amount from line 3 of the worksheet

applies

worksheet in the instructions is used to

is entered on line 1 of Form 8615. Carla did

Enter the child’s earned income

figure the amount on line 1 of Form 8615.

not itemize deductions, so $1,700 is entered

plus the amount of any penalty

Carla’s filled-in worksheet and Part I of

on line 2. Line 3 of Form 8615 is the result

on early withdrawal of savings

her Form 8615, with lines 1 through 5 filled

of subtracting $1,700 from $4,400. Carla’s

from the child’s Form 1040, line

in, are shown here.

taxable income of $4,100 (as shown on line

30; Form 1040A, line 16; or

Carla’s total income of $5,000 (as shown

27 of her Form 1040A) is entered on line 4

Form

1040NR,

line

29,

600

of Form 8615. The smaller of $2,700 or

on line 15 of her Form 1040A) is entered on

whichever applies

Subtract line 2 from line 1.

$4,100 is entered on line 5. This is her net

Enter the result here and on

investment income.

4,400

Form 8615, line 1

8615

OMB No. 1545-0074

Tax for Children Under Age 18

2006

Form

With Investment Income of More Than $1,700

Attach only to the child’s Form 1040, Form 1040A, or Form 1040NR.

Department of the Treasury

Attachment

See separate instructions.

(99)

Sequence No.

Internal Revenue Service

Child’s name shown on return

Child’s social security number

Carla C. Rose

1 1 1 0 0 1 1 1 1

Before you begin:

If the child, the parent, or any of the parent’s other children under age 18 must use the Schedule D Tax

Worksheet or has income from farming or fishing, see Pub. 929, Tax Rules for Children and Dependents. It

explains how to figure the child’s tax using the Schedule D Tax Worksheet or Schedule J (Form 1040).

Parent’s name (first, initial, and last). Caution: See instructions before completing.

Parent’s social security number

George B. Rose

1 2 3 0 0 4 5 6 7

Parent’s filing status (check one):

Single

Married filing jointly

Married filing separately

Head of household

Qualifying widow(er)

Part I

Child’s Net Investment Income

4,400

Enter the child’s investment income (see instructions)

If the child did not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter

1,700

$1,700. Otherwise, see instructions

Subtract line 2 from line 1. If zero or less, stop; do not complete the rest of this form but do

2,700

attach it to the child’s return

Enter the child’s taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR,

4,100

line 40. If the child files Form 2555 or 2555-EZ, see the instructions

Enter the smaller of line 3 or line 4. If zero, stop; do not complete the rest of this form but do

2,700

attach it to the child’s return

Line 4 (Child’s Taxable Income)

1. $850 plus the child’s itemized deductions

and on Form 8615, line 1. Line 2 is $1,700

that are directly connected with the pro-

because that is more than the sum of $850 and

Enter on line 4 the child’s taxable income from

duction of the investment income entered

his directly-connected itemized deductions of

Form 1040, line 43; Form 1040A, line 27; or

on line 1, or

$300.

Form 1040NR, line 40.

2. $1,700.

Example 2. Eleanor, age 8, has investment

income of $16,000 and an early withdrawal pen-

Directly connected. Itemized deductions are

Child files Form 2555 or 2555-EZ. If the child

alty of $100. She has no other income. She has

directly connected with the production of invest-

files Form 2555 or 2555-EZ to claim the foreign

itemized deductions of $1,050 (net of the

ment income if they are for expenses paid to

earned income exclusion or housing exclusion,

2%-of-adjusted-gross-income limit) that are di-

produce or collect taxable income or to manage,

the Foreign Earned Income Tax Worksheet in

conserve, or maintain property held for produc-

rectly connected with the production of her in-

the Form 1040 instructions must be used to

ing income. These expenses include custodian

vestment income. Her adjusted gross income,

figure the child’s tax. When using Form 8615 to

entered on line 1, is $15,900 ($16,000 − $100).

fees and service charges, service fees to collect

figure the amount to enter on line 8 of that

taxable interest and dividends, and certain in-

The amount on line 2 is $1,900. This is the larger

worksheet, enter the amount from line 7 of the

vestment counsel fees.

of:

worksheet, instead of the child’s taxable income

These expenses are added to certain other

on line 4 of Form 8615.

miscellaneous itemized deductions on Schedule

1. $850 plus the $1,050 of directly connected

A (Form 1040). Only the amount greater than

itemized deductions, or

2% of the child’s adjusted gross income can be

Line 5 (Net Investment Income)

2. $1,700.

deducted. See Publication 529, Miscellaneous

Deductions, for more information.

A child’s net investment income cannot be more

than his or her taxable income. Enter on Form

Line 3

Example 1. Roger, age 12, has investment

8615, line 5, the smaller of line 3 or line 4. This is

income of $8,000, no other income, no adjust-

the child’s net investment income.

Subtract line 2 from line 1 and enter the result on

ments to income, and itemized deductions of

this line. If zero or less, do not complete the rest

If zero or less, do not complete the rest of the

$300 (net of the 2%-of-adjusted-gross-income

of the form. However, you must still attach Form

form. However, you must still attach Form 8615

limit) that are directly connected with his invest-

to the child’s tax return. Figure the tax on the

ment income. His adjusted gross income is

8615 to the child’s tax return. Figure the tax on

child’s taxable income in the normal manner.

$8,000, which is entered on Form 1040, line 38,

the child’s taxable income in the normal manner.

Page 12

Publication 929 (2006)

Publication 929 - Tax Rules For Children And Dependents - 2006 Page 12

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