Publication 929 - Tax Rules For Children And Dependents

Illustrated Part II of Form 8615

Randy and his sister must each file Form

Randy’s sister’s net investment income of

Randy’s net investment income on line 5

8615. Their parents’ joint return information

$1,520 (from line 5 of her Form 8615) is

($2,280) is added to his sister’s net

investment income on line 7 ($1,520) and

is used on the Forms 8615 of both children.

entered on line 7 of Randy’s Form 8615. The

The net investment income on line 5 of

amounts on line 5 ($2,280), line 6 ($50,570),

the total, $3,800, is entered on line 12a.

Randy’s Form 8615 is $2,280. His sister’s

and line 7 ($1,520) are added and the total

The amount on line 5 ($2,280) is divided

net investment income is $1,520. Randy’s

of $54,370 is entered on line 8.

by the amount on line 12a ($3,800) and the

parents’ taxable income is $50,570. Their

The tax on $54,370 is found in the Tax

result, .600, is entered on line 12b.

tax, from the Tax Table, is $6,831.

Table using the parents’ joint filing status.

The amount on line 11 ($570) is multiplied

Part II of Randy’s Form 8615, with lines 6

The tax, $7,401, is entered on line 9.

by the amount on line 12b (.600) and the

through 13 filled in, is shown here.

Randy’s parents’ tax of $6,831 (from line 44

result, $342, is entered on line 13. This is

of Form 1040) is entered on line 10 and is

Randy’s parents’ taxable income of

Randy’s tentative tax based on his parents’

subtracted from the amount on line 9. The

tax rate.

$50,570 (from line 43 of Form 1040) is

difference, $570, is entered on line 11.

entered on Form 8615, line 6.

Part II

Tentative Tax Based on the Tax Rate of the Parent

Enter the parent’s taxable income from Form 1040, line 43; Form 1040A, line 27; Form 1040EZ,

50,570

line 6; Form 1040NR, line 40; or Form 1040NR-EZ, line 14. If zero or less, enter -0-. If the parent

files Form 2555 or 2555-EZ, see the instructions

Enter the total, if any, from Forms 8615, line 5, of all other children of the parent named

1,520

above. Do not include the amount from line 5 above.

54,370

Add lines 5, 6, and 7 (see instructions)

Enter the tax on the amount on line 8 based on the parent’s filing status above (see instructions).

If the Qualified Dividends and Capital Gain Tax Worksheet, Schedule D Tax Worksheet, or

Schedule J (Form 1040) is used to figure the tax, check here

7,401

Enter the parent’s tax from Form 1040, line 44; Form 1040A, line 28, minus any alternative

minimum tax; Form 1040EZ, line 11; Form 1040NR, line 41; or Form 1040NR-EZ, line 15. Do not

include any tax from Form 4972 o r 8814. If the Qualified Dividends and Capital Gain Tax

Worksheet, Schedule D Tax Worksheet, or Schedule J (Form 1040) was used to figure the tax,

6,831

check here

Subtract line 10 from line 9 and enter the result. If line 7 is blank, also enter this amount on line

570

13 and go to Part III

3,800

12a

Add lines 5 and 7

600

12b

Divide line 5 by line 12a. Enter the result as a decimal (rounded to at least three places)

Multiply line 11 by line 12b

342

Step 2. Figuring a Tentative

parents’s tax. Enter the amount from line 7 of the

the return using estimates or get an extension of

parent’s Foreign Earned Income Tax Worksheet

time to file. Estimates and extensions are dis-

Tax at the Parent’s Tax

instead of the parent’s taxable income, on line 6

cussed earlier under Providing Parental Infor-

Rate (Form 8615, Part II)

of Form 8615.

mation (Form 8615, Lines A – C).

The next step in completing Form 8615 is to

figure a tentative tax on the child’s net invest-

Line 7 (Net Investment Income of

Line 8 (Parent’s Taxable Income

ment income at the parent’s tax rate. The tenta-

Other Children)

Plus Children’s Net Investment

tive tax at the parent’s tax rate is the difference

Income)

between the tax on the parent’s taxable income

If the tax return information of the parent is also

figured with the child’s net investment income

used on any other child’s Form 8615, enter on

Enter on this line the total of lines 5, 6, and 7.

(plus the net investment income of any other

line 7 the total of the amounts from line 5 of all

You must determine the amount of net capital

child whose Form 8615 includes the tax return

the other children’s Forms 8615. Do not include

gain and qualified dividends included on this line

information of that parent) and the tax figured

the amount from line 5 of the Form 8615 being

before completing line 9 of Form 8615.

without it.

completed.

Net capital gain. Net capital gain is the

When figuring the tentative tax at the par-

smaller of the gain, if any, on Schedule D, line

ent’s tax rate, do not refigure any of the exclu-

Example. Paul and Jane Persimmon have

15, or the gain, if any, on Schedule D, line 16. If

sions, deductions, or credits on the parent’s

three children, Sharon, Jerry, and Mike, who

Schedule D is not required, it is the amount on

return because of the child’s net investment in-

must attach Form 8615 to their tax returns. The

Form 1040, line 13; Form 1040A, line 10; or

come. For example, do not refigure the medical

children’s net investment income amounts on

Form 1040NR, line 14.

expense deduction.

line 5 of their Forms 8615 are:

Figure the tentative tax on lines 6 through 13.

•

Qualified dividends. Qualified dividends

Sharon — $800

For an example, see the Illustrated Part II of

are those dividends reported on line 9b of Form

•

Form 8615.

Jerry — $600

1040 or Form 1040A, or line 10b of Form

•

1040NR.

Mike — $1,000

Line 6 (Parent’s Taxable Income)

Net capital gain and qualified dividends on

Line 7 of Sharon’s Form 8615 will show

line 8. If neither the child nor the parent nor

$1,600, the total of the amounts on line 5 of

Enter on line 6 the amount from the parent’s

any other child has net capital gain, the net

Jerry’s and Mike’s Forms 8615.

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

capital gain on line 8 is zero.

Line 7 of Jerry’s Form 8615 will show $1,800

1040EZ, line 6; Form 1040NR, line 40; or Form

If neither the child, nor the parent, nor any

($800 + $1,000).

1040NR-EZ, line 14. If the parent’s taxable in-

other child has qualified dividends, the amount

come is zero or less, enter zero on line 6.

Line 7 of Mike’s Form 8615 will show $1,400

of qualified dividends on line 8 is zero.

($800 + $600).

Parent files Form 2555 or 2555-EZ. If the

If the child, parent, or any other child has net

parent files Form 2555 or 2555-EZ, the Foreign

Other children’s information not available.

capital gain, figure the amount of net capital gain

Earned Income Tax Worksheet in the Form

If the net investment income of the other children

included on line 8 by adding together the net

1040 instructions must be used to figure the

is not available when the return is due, either file

capital gain amounts included on lines 5, 6, and

Publication 929 (2006)

Page 13

Publication 929 - Tax Rules For Children And Dependents - 2006 Page 13

Related Articles

Related forms

Related Categories