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taxmap/pubs/p929-009.htm#en_us_publink1000203825

Tax for Certain Children Who Have Investment Income of More Than $1,900(p15)


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previous topic occurrence Tax for Certain Children Who Have Investment Income of More Than $1,900 next topic occurrence

If a child's interest, dividends, and other investment income total more than $1,900, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. 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. Attach the completed form to the child's Form 1040, Form 1040A, or Form 1040NR.
taxmap/pubs/p929-009.htm#en_us_publink1000203826

When Form 8615 must be filed.(p15)


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Form 8615 must be filed for a child if all of the following statements are true.
  1. The child's investment income was more than $1,900.
  2. The child is required to file a return for 2009.
  3. The child either:
    1. Was under age 18 at the end of the year,
    2. 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
    3. Was a full-time student over age 18 and under age 24 at the end of the year and did not have earned income that was more than half of his or her support.
  4. At least one of the child's parents was alive at the end of 2009.
  5. The child does not file a joint return for 2009.
These conditions are also shown in Figure 2.
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Certain January 1 birthdays.(p15)


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Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed.
IF a child was born on...THEN, at the end of 2009, the child is considered to be...
January 1, 199218*
January 1, 199119**
January 1, 198624***
*This child is not under age 18. The child meets condition 3 only if the child did not have earned income that was more than half of the child's support.
**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.
***Do not use Form 8615 for this child.
taxmap/pubs/p929-009.htm#en_us_publink1000238938taxmap/pubs/p929-009.htm#en_us_publink1000203829

Providing Parental Information  
(Form 8615, Lines A–C)(p16)


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On Form 8615, lines A and B, enter the parent's name and social security number. (If the parents filed a joint return, enter the name and social security number listed first on the joint return.) On line C, check the box for the parent's filing status.
See Which Parent's Return To Use, earlier, for information on which parent's return information must be used on Form 8615.
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Parent with different tax year.(p16)


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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.
taxmap/pubs/p929-009.htm#en_us_publink1000203831

Example.(p16)

Kimberly must use her mother's tax and taxable income to complete her Form 8615 for calendar year 2009 (January 1 – December 31). Kimberly's mother files her tax return on a fiscal year basis (July 1 – June 30). Kimberly must use the information on her mother's return for the tax year ending June 30, 2009, to complete her 2009 Form 8615.
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Parent's return information not known timely.(p16)


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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.
You can use any reasonable estimate. This includes using information from last year's return. If you use an estimated amount on Form 8615, enter "Estimated" on the line next to the amount.
When you get the correct information, file an amended return on Form 1040X, Amended U.S. Individual Income Tax Return.
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Extension of time to file.(p16)
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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.S. Individual Income Tax Return. You can file a paper Form 4868 or you can file it electronically. See the instructions for Form 4868 for details.
EIC
An extension of time to file is not an extension of time to pay. You must make an accurate estimate of the tax for 2009. 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. See Form 4868 and its instructions.
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Parent's return information not available.(p16)


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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).
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How to request.(p16)
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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. (The IRS cannot process a request received before the end of the tax year.)
Deposit
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.
The request must contain all of the following.
  • 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.
  • Proof of the child's age (for example, a copy of the child's birth certificate).
  • Evidence the child has more than $1,900 of unearned income (for example, a copy of the child's prior year tax return or copies of Forms 1099 for the current year).
  • 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.
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.
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Step 1. Figuring the Child's Net Investment Income 
(Form 8615, Part I)(p16)


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previous topic occurrence Figuring the Child's Net Investment Income (Form 8615, Part I) next topic occurrence

The first step in figuring a child's tax using Form 8615 is to figure the child's net investment income. To do that, use Form 8615, Part I. For an example, see the Illustrated Part I of Form 8615 on the next page.
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Line 1 (Investment Income)(p16)


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previous topic occurrence Investment Income next topic occurrence

If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. Adjusted gross income is shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 36. Form 1040EZ and Form 1040NR-EZ cannot be used if Form 8615 must be filed.
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.
Pencil
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.
Alternate Worksheet
for Form 8615, Line 1
A. Enter the amount from the child's Form 1040, line 22, or Form 1040NR, line 23             
B. 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. Enter this total as a positive number (greater than zero)
            
C. Add line A and line B and
enter the total.
            
D. Enter the child's earned income plus any amount from the child's Form 1040, line 30, or the child's Form 1040NR, line 29.             
 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. Subtract line D from line C. Enter the result here and on Form 8615, line 1             
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Investment income defined.(p17)


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Investment income is generally all income other than salaries, wages, and other amounts received as pay for work actually done. It includes taxable interest, dividends, capital gains (including capital gain distributions), the taxable part of social security and pension payments, and certain distributions from trusts. Investment 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).
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Nontaxable income.(p17)
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For this purpose, investment income includes only amounts the child must include in total income. Nontaxable investment income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included.
taxmap/pubs/p929-009.htm#en_us_publink1000203848

Capital loss.(p17)
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A child's capital losses are taken into account in figuring the child's investment income. Capital losses are first applied against capital gains. 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 investment income. Any difference over $3,000 is carried to the next year.
taxmap/pubs/p929-009.htm#en_us_publink1000238933taxmap/pubs/p929-009.htm#en_us_publink1000238934
taxmap/pubs/p929-009.htm#TXMP252bf848
Illustrated Part I of Form 8615 Text DescriptionIllustrated Part I of Form 8615  
taxmap/pubs/p929-009.htm#en_us_publink1000203849

Income from property received as a gift.(p18)
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A child's investment income includes all income produced by property belonging to the child. 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.
A child's investment income includes income produced by property given as a gift to the child. This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act.
taxmap/pubs/p929-009.htm#en_us_publink1000203850

Example.(p18)

Amanda Black, age 13, received the following income.
  • Dividends—$600
  • 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.
Amanda's investment income is $1,900. This is the total of the dividends ($600), taxable interest ($1,200), and capital gains reduced by capital losses ($300 − $200 = $100). Her wages are earned (not investment) income because they are received for work actually done. Her tax-exempt interest is not included because it is nontaxable.
taxmap/pubs/p929-009.htm#en_us_publink1000203851

Trust income.(p18)
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If a child is the beneficiary of a trust, distributions of taxable interest, dividends, capital gains, and other investment income from the trust are investment income to the child.
However, taxable distributions from a qualified disability trust are considered earned income for the purposes of completing Form 8615. See the Form 8615 instructions for details.
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Adjustment to income.(p18)
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In figuring the amount to enter on line 1, the child's investment income is reduced by any penalty on the early withdrawal of savings.
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Line 2 (Deductions)(p18)


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previous topic occurrence Deduction next topic occurrence

If the child does not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter $1,900 on line 2.
If the child does itemize deductions, enter on line 2 the larger of:
  1. $950 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29 (or Schedule A (Form 1040NR), line 17), that are directly connected with the production of the investment income entered on line 1, or
  2. $1,900.
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Directly connected.(p18)


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Itemized deductions are directly connected with the production of investment income if they are for expenses paid to produce or collect taxable income or to manage, conserve, or maintain property held for producing income. These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees.
These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). Only the amount greater than 2% of the child's adjusted gross income can be deducted. See Publication 529, Miscellaneous Deductions, for more information.
taxmap/pubs/p929-009.htm#en_us_publink1000203855

Example 1.(p18)

Roger, age 12, has investment 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 investment income. His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. Line 2 is $1,900 because that is more than the sum of $950 and his directly-connected itemized deductions of $300.
taxmap/pubs/p929-009.htm#en_us_publink1000203856

Example 2.(p18)

Eleanor, age 8, has investment income of $16,000 and an early withdrawal penalty of $100. She has no other income. 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 investment income. Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). The amount on line 2 is $2,000. This is the larger of:
  1. $950 plus the $1,050 of directly connected itemized deductions, or
  2. $1,900.
taxmap/pubs/p929-009.htm#en_us_publink1000203857

Line 3(p18)


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Subtract line 2 from line 1 and enter the result on this line. If zero or less, do not complete the rest of the form. However, you must still attach Form 8615 to the child's tax return. Figure the tax on the child's taxable income in the normal manner.
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Line 4 (Child's Taxable Income)(p18)


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previous topic occurrence Child's Taxable Income next topic occurrence

Enter on line 4 the child's taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 40.
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Child files Form 2555 or 2555-EZ.(p18)


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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 is used to figure the child's tax. When using Form 8615 to figure the amount to enter on line 4 of that worksheet, enter the amount from line 3 of the worksheet, instead of the child's taxable income, on line 4 of Form 8615.
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Line 5 (Net Investment Income)(p18)


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previous topic occurrence Net Investment Income next topic occurrence

A child's net investment income cannot be more than his or her taxable income. Enter on Form 8615, line 5, the smaller of line 3 or line 4. This is the child's net investment income.
If zero or less, do not complete the rest of the form. However, you must still attach Form 8615 to the child's tax return. Figure the tax on the child's taxable income in the normal manner.
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Step 2. Figuring a Tentative Tax at the Parent's Tax Rate  
(Form 8615, Part II)(p19)


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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 investment income at the parent's tax rate. 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 investment income (plus the net investment income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it.
When figuring the tentative tax at the parent's tax rate, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net investment income. For example, do not refigure the medical expense deduction.
Figure the tentative tax on lines 6 through 13. For an example, see the Illustrated Part II of Form 8615 above.
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Line 6 (Parent's Taxable Income)(p19)


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previous topic occurrence Parent's Taxable Income next topic occurrence

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 40; or Form 1040NR-EZ, line 14. If the parent's taxable income is zero or less, enter zero on line 6.
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Parent files Form 2555 or 2555-EZ.(p19)


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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. Enter the amount from line 3 of that worksheet, instead of the parent's taxable income, on line 6 of Form 8615.
taxmap/pubs/p929-009.htm#en_us_publink1000238939taxmap/pubs/p929-009.htm#en_us_publink1000238940
taxmap/pubs/p929-009.htm#TXMP24e99271
Illustrated Part II of Form 8615 Text DescriptionIllustrated Part II of Form 8615  
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Line 7 (Net Investment Income of Other Children)(p19)


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previous topic occurrence Net Investment Income of Other Children next topic occurrence

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. Do not include the amount from line 5 of the Form 8615 being completed.
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Example.(p19)

Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. The children's net investment 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.
Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000).
Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600).
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Other children's information not available.(p20)


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If the net investment 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. Estimates and extensions are discussed earlier under Providing Parental Information (Form 8615, Lines A–C).
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Line 8 (Parent's Taxable Income Plus Children's Net Investment Income)(p20)


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Parent's Taxable Income Plus Children's Net Investment Income

Enter on this line the total of lines 5, 6, and 7. You must determine the amount of net capital gain and qualified dividends included on this line before completing line 9 of Form 8615.
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Net capital gain.(p20)
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Net capital gain is the smaller of the gain, if any, on Schedule D, line 15, or the gain, if any, on Schedule D, line 16. If Schedule D is not required, it is the amount on Form 1040, line 13; Form 1040A, line 10; or Form 1040NR, line 14.
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Qualified dividends.(p20)
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Qualified dividends are those dividends reported on line 9b of Form 1040 or Form 1040A, or line 10b of Form 1040NR.
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Net capital gain and qualified dividends on line 8.(p20)


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If neither the child, parent, nor any other child has net capital gain, the net capital gain on line 8 is zero.
If neither the child, parent, nor any other child has qualified dividends, the amount of qualified dividends on line 8 is zero.
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. 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. Use the instructions for Form 8615, line 8, including the appropriate Line 5 Worksheet, to find these amounts.
Note.The amount of any net capital gain or qualified dividends is not separately reported on line 8. It is needed, however, when figuring the tax on line 9.
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Line 9 (Tax on Parent's Taxable Income Plus Children's Net Investment Income)(p20)


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Tax on Parent's Taxable Income Plus Children's Net Investment 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.
  • 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. 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.
  • If line 8 does include any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. For details, see the instructions for Form 8615, line 9. However, if the child, parent, or any other child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. But if Schedule J is used to figure the tax on the parent's return, use it to figure this tax.
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Child files Form 2555 or 2555-EZ.(p20)


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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.
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Using the Schedule D Tax Worksheet for line 9 tax.(p20)


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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. 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. Then figure the line 9 tax using another Schedule D Tax Worksheet. (Do not attach this Schedule D Tax Worksheet to the child's return.)
Complete this Schedule D Tax Worksheet as follows.
  1. On line 1, enter the amount from Form 8615, line 8.
  2. On line 2, enter the qualified dividends included on Form 8615, line 8. (See the earlier discussion for line 8.)
  3. 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.
  4. 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. If applicable, include instead the smaller amount entered on the dotted line next to line 4e.
  5. On lines 5 and 6, follow the worksheet instructions.
  6. On line 7, enter the net capital gain included on Form 8615, line 8. (See the earlier discussion for line 8.)
  7. On lines 8 through 10, follow the worksheet instructions.
  8. On line 11, enter zero if neither the child, parent, nor any other child has unrecaptured section 1250 gain (Schedule D, line 19) or 28% rate gain (Schedule D, line 18). 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. Figure these amounts as explained later under Figuring unrecaptured section 1250 gain (line 11) and Figuring 28% rate gain (line 11).
  9. 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. Otherwise, skip steps 10, 11, and 12 below, and go to step 13.
  10. Determine whether there is a line 8 capital gain excess as follows.
    1. 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. (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 40.)
    2. Subtract (a) from the amount on line 1 of this Schedule D Tax Worksheet.
    3. Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. If the result is more than zero, that amount is the line 8 capital gain excess. If the result is zero or less, there is no line 8 capital gain excess.
  11. If there is no line 8 capital gain excess, skip step 12 below and go to step 13.
  12. 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. (These modifications are to be made only for purposes of filling out this Schedule D Tax Worksheet.)
    1. Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 8 capital gain excess.
    2. 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.
    3. 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.
    4. 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.
  13. Complete lines 12 through 36 following the worksheet instructions. Use the parent's filing status to complete lines 15, 33, and 35.
Enter the amount from line 36 of this Schedule D Tax Worksheet on Form 8615, line 9, and check the box on that line. Do not attach this worksheet to the child's return.
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Figuring 28% rate gain (line 11).(p21)
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If the child, parent, or any other child has 28% rate gain, figure the amount of 28% rate gain included in the net capital gain on line 8 of Form 8615 using the following worksheet.
Worksheet 1 for Line 11 of the Schedule D
Tax Worksheet – 28% Rate Gain
(Line 9 Tax)
 1.Enter the amount, if any, from the child's Schedule D, line 18.             
  If line 1 is zero or blank, skip lines 2 through 4, enter -0- on line 5, and go to line 6.  
 2.Enter the amount from the last
line of the child's completed
Line 5 Worksheet in the
instructions for Form 8615, line 8
            
 3.Enter the amount from line 2
of the child's completed
Line 5 Worksheet
            
 4.Divide line 2 by line 3. Enter
the result as a decimal
            
 5.Multiply line 1 by line 4             
 6.If no other child has 28% rate gain, enter -0-. Otherwise, repeat lines 1 through 5 above for each other child who has 28% rate gain and enter the total of the line 5 amounts for those other children             
 7.Enter the amount, if any, from line 18 of the parent's Schedule D.             
 8.Add lines 5, 6, and 7. Also include this amount on the Schedule D Tax Worksheet, line 11.             
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Figuring unrecaptured section 1250 gain (line 11).(p21)
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If the child, parent, or any other child has unrecaptured section 1250 gain, figure the amount of unrecaptured section 1250 gain included in the net capital gain on line 8 of Form 8615 using the following worksheet.
Worksheet 2 for Line 11 of the Schedule D
Tax Worksheet – Unrecaptured
Section 1250 Gain
(Line 9 Tax)
1.Enter the amount, if any, from the child's Schedule D, line 19.             
  If line 1 is zero or blank, skip lines 2 through 4, enter -0-
on line 5, and go to line 6.
 
2.Enter the amount, if any, from
the last line of the child's
completed Line 5 Worksheet in the instructions for Form 8615, line 8
            
3.Enter the amount from line 2 of the child's completed Line 5 Worksheet             
4.Divide line 2 by line 3. Enter
the result as a decimal
            
5.Multiply line 1 by line 4             
6.If no other child has unrecaptured section 1250 gain, enter -0-. Otherwise, repeat lines 1 through 5 for each other child who has unrecaptured section 1250 gain and enter the total of the line 5 amounts for those children             
7.Enter the amount, if any, from line 19 of the parent's Schedule D             
8.Add lines 5, 6, and 7. Also include this amount on the Schedule D Tax Worksheet, line 11.             
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Using Schedule J for line 9 tax.(p22)


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Use Schedule J, Income Averaging for Farmers and Fishermen, to figure the line 9 tax on Form 8615 if Schedule J is used to figure the tax on the parent's return. First complete the actual Schedule J for the parent, then use another Schedule J as a worksheet to figure the tax to enter on line 9 of Form 8615. (Do not attach this worksheet to the child's return.)
Complete this worksheet Schedule J as follows.
  1. On line 1, enter the amount from Form 8615, line 8.
  2. On lines 2a, 2b, and 2c, enter the amounts from the parent's Schedule J, lines 2a, 2b, and 2c.
  3. Complete line 3 following the Schedule J instructions.
  4. Complete line 4. If Form 8615, line 8, includes any net capital gain, use the Qualified Dividends and Capital Gain Tax Worksheet to figure the tax amount on this line. For details on how to use the worksheet, see the instructions for Form 8615, line 9, but use the amount on line 3 of this worksheet Schedule J (instead of the amount on Form 8615, line 8) in step (1) of Using the Qualified Dividends and Capital Gain Tax Worksheet for line 9 tax. However, if the child, parent, or any other child has 28% rate gain, or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. Follow the earlier instructions under Using the Schedule D Tax Worksheet for line 9 tax, except use the amount on line 3 of this worksheet Schedule J (instead of the amount on Form 8615, line 8) in step (1).
  5. On lines 5 through 16, enter the amounts from the parent's Schedule J, lines 5 through 16.
  6. Complete lines 17 and 18 following the Schedule J instructions.
  7. On lines 19 through 22, enter the amounts from the parent's Schedule J, lines 19 through 22.
  8. Complete line 23 following the Schedule J instructions.
Enter the amount from line 23 of this worksheet Schedule J on Form 8615, line 9, and check the box on that line.
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Line 10 (Parent's Tax)(p22)


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Parent's Tax

Enter on line 10 the amount from the parent's 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 the tax, if any, from Form 4972 or Form 8814 or any tax from recapture of an education credit.
If the parent files Form 2555 or 2555-EZ, enter the amount from line 4 of the parent's Foreign Earned Income Tax Worksheet, instead of the parent's tax from Form 1040, line 44.
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Line 11 (Tentative Tax)(p22)


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Subtract line 10 from line 9 and enter the result on this line. This is the tentative tax.
If line 7 is blank, skip lines 12a and 12b and enter the amount from line 11 on line 13. Also skip the discussion for lines 12a and 12b that follows.
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Lines 12a and 12b (Dividing the Tentative Tax)(p22)


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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 investment income. This is done on lines 12a, 12b, and 13. Add the amount on line 7 to the amount on line 5 and enter the total on line 12a. Divide the amount on line 5 by the amount on line 12a and enter the result, as a decimal, on line 12b.
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Example.(p22)

In the earlier example under Line 7 (Net Investment Income of Other Children), Sharon's Form 8615 shows $1,600 on line 7. The amount entered on line 12a is $2,400, the total of the amounts on lines 5 and 7 ($800 + $1,600). The decimal on line 12b is .333, figured as follows and rounded to three places.  
  $800 = .333
 $2,400
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Line 13 (Child's Share of Tentative Tax)(p22)


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Child's Share of Tentative Tax

If an amount is entered on line 7, multiply line 11 by the decimal on line 12b and enter the result on line 13. This is the child's share of the tentative tax.
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Step 3. Figuring the Child's Tax  
(Form 8615, Part III)(p23)


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previous topic occurrence Figuring the Child's Tax (Form 8615, Part III) next topic occurrence

The final step in figuring a child's tax using Form 8615 is to determine the larger of:
  1. The total of:
    1. The child's share of the tentative tax based on the parent's tax rate, plus
    2. The tax on the child's taxable income in excess of net investment income, figured at the child's tax rate, or
  2. The tax on the child's taxable income, figured at the child's tax rate.
This is the child's tax. It is figured on Form 8615, lines 14 through 18.
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Line 14 (Child's Taxable Income in Excess of Net Investment Income)(p23)


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Child's Taxable Income in Excess of Net Investment Income

If lines 4 and 5 of Form 8615 are the same, the child's taxable income is not more than the child's net investment income. Enter zero on lines 14 and 15, and go to line 16. Also skip the rest of this discussion and the discussion for line 15 that follows.
If lines 4 and 5 are not the same, subtract line 5 from line 4 and enter the result on line 14. Then, before completing line 15, you must determine the amount of net capital gain and qualified dividends, if any, included on line 14.
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Net capital gain and qualified dividends on line 14.(p23)


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If the child does not have any net capital gain or qualified dividends, the amount of the net capital gain and qualified dividends included on line 14 is zero.
If the child has net capital gain, the amount of net capital gain included on line 14 is the amount from line 2 of the child's completed Line 5 Worksheet minus the amount from the last line of that worksheet. (See the earlier discussion for line 8 of Form 8615.)
If the child has qualified dividends, the amount of qualified dividends included on line 14 is the amount from line 1 of the child's completed Line 5 Worksheet minus the amount from the next to the last line of that worksheet. (See the earlier discussion of line 8 of Form 8615.)
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Line 15 (Tax on Child's Taxable Income in Excess of Net Investment Income)(p23)


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Tax on Child's Taxable Income in Excess of Net Investment Income

Figure the tax on the amount on line 14 using the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet, the Schedule D Tax Worksheet, or Schedule J (Form 1040), as follows.
  • If line 14 does not include any net capital gain or qualified dividends, use the Tax Table or Tax Computation Worksheet (or Schedule J, if applicable) to figure this tax.
  • If line 14 does include any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. For details, see the instructions for Form 8615, line 15. However, if the child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. (But use Schedule J instead, if it applies.)
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Child files Form 2555 or 2555-EZ.(p23)


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If line 14 includes any net capital gain or qualified dividends and the child files Form 2555 or 2555-EZ, use Using the Schedule D Tax Worksheet for line 15 tax, next, to figure the line 15 tax.
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Using the Schedule D Tax Worksheet for line 15 tax.(p23)


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Use the Schedule D Tax Worksheet (in the Schedule D instructions) to figure the line 15 tax on Form 8615 if the child has unrecaptured section 1250 gain or 28% rate gain. Do not attach this Schedule D Tax Worksheet to the child's return.
Complete this Schedule D Tax Worksheet as follows.
  1. On line 1, enter the amount from Form 8615, line 14.
  2. On line 2, enter the qualified dividends included on Form 8615, line 14. (See the earlier discussion for line 14.)
  3. Leave lines 3 through 5 blank.
  4. Enter the amount from line 2 on line 6.
  5. On line 7, enter the net capital gain included on Form 8615, line 14. (See the earlier discussion for line 14.)
  6. Skip line 8.
  7. Enter the amount from line 7 on line 9.
  8. Complete line 10, following the worksheet instructions.
  9. On line 11, enter zero if the child has no 28% rate gain (Schedule D, line 18) or unrecaptured section 1250 gain (Schedule D, line 19). Otherwise, see Worksheet 1 for Line 11 of the Schedule D Tax Worksheet – 28% Rate Gain (Line 9 Tax) and Worksheet 2 for Line 11 of the Schedule D Tax Worksheet – Unrecaptured Section 1250 Gain (Line 9 Tax) under Using the Schedule D Tax Worksheet for line 9 tax, earlier. For each worksheet you complete, subtract line 5 of that worksheet from line 1 of that worksheet, and include the result on line 11 of this worksheet.
  10. If the child is not filing Form 2555 or 2555-EZ, skip steps 11, 12, and 13 below, and go to step 14. If the child is filing Form 2555 or 2555-EZ, go to step 11.
  11. Determine whether there is a line 14 capital gain excess as follows.
    1. Subtract from line 2 of the child's Foreign Earned Income Tax Worksheet 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 40.
    2. Subtract (a) from the amount on line 14 of Form 8615.
    3. Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. If the result is more than zero, that amount is the line 14 capital gain excess. If the result is zero or less, there is no line 14 capital gain excess.
  12. If there is no line 14 capital gain excess, skip step 13 below and go to step 14.
  13. If there is a line 14 capital gain excess, complete a second Schedule D Tax Worksheet as instructed above and in step 14 below but in its entirety and with the following additional modifications. (These modifications are to be made only for purposes of filling out this Schedule D Tax Worksheet.)
    1. Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 14 capital gain excess.
    2. Reduce the amount you would otherwise enter on line 6 (but not below zero) by any of the line 14 capital gain excess not used in (a) above.
    3. If the child has 28% rate gain, reduce the amount you would otherwise enter on line 11, as figured in step 9, (but not below zero) by the line 14 capital gain excess.
    4. If the child has unrecaptured section 1250 gain, reduce the amount you would otherwise enter on line 11, as figured in step 9, (but not below zero) by the line 14 capital gain excess not used in (c) above.
  14. Complete lines 12 through 36 following the worksheet instructions. Use the child's filing status to complete lines 15, 33, and 35.
Enter the amount from line 36 of this Schedule D Tax Worksheet on Form 8615, line 15, and check the box on that line. Do not attach this worksheet to the child's return.
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Using Schedule J for line 15 tax.(p24)


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If Schedule J applies, use it as a worksheet to figure the tax to enter on Form 8615, line 15. On line 1 of this worksheet, enter the amount from Form 8615, line 14. Complete lines 2a through 23 following the Schedule J instructions. Use the child's filing status to complete lines 4, 8, 12, and 16.
Enter the amount from line 23 of this worksheet Schedule J, on Form 8615, line 15, and check the box on that line. Do not attach this worksheet to the child's return.
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Line 16 (Combined Tax)(p24)


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Combined Tax

Add lines 13 and 15 and enter the total on line 16. This is the child's tax figured at the parent's rate on net investment income and the child's rate on other income.
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Line 17 (Tax at Child's Rate)(p24)


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Tax at Child's Rate

Figure the tax on the amount on line 4. Use the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet, the Schedule D Tax Worksheet, or the child's actual Schedule J, whichever applies. Enter the tax amount on line 17. If it is from the Qualified Dividends and Capital Gain Tax Worksheet, the Schedule D Tax Worksheet, or Schedule J, check the box on that line.
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Child files Form 2555 or 2555-EZ.(p24)


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If the child files Form 2555 or 2555-EZ and has a net capital gain or qualified dividends, figure the tax using the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet, whichever applies. To fill out that worksheet, follow the instructions in the footnote to the Foreign Earned Income Tax Worksheet.
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Line 18 (Tax)(p24)


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Enter on line 18 the larger of line 16 or line 17. Also enter this amount on the child's Form 1040, line 44; Form 1040A, line 28; or Form 1040NR, line 41. This is the child's tax.
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Child files Form 2555 or 2555-EZ.(p24)


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If the child files Form 2555 or 2555-EZ, do not enter the amount from Form 8615, line 18, on the child's Form 1040, line 44. Instead, enter the amount from Form 8615, line 18, on line 4 of the child's Foreign Earned Income Tax Worksheet. Then complete the rest of the Foreign Earned Income Tax Worksheet to figure the child's tax.
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Alternative Minimum Tax(p24)


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A child may be subject to alternative minimum tax (AMT) if he or she has certain items given preferential treatment under the tax law. These items include accelerated depreciation and certain tax-exempt interest income. The AMT may also apply if the child has passive activity losses or certain distributions from estates or trusts.
For more information on who is liable for AMT and how to figure it, see Form 6251.
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Limit on exemption amount.(p24)


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Ordinarily, single individuals can subtract a $46,700 exemption amount from their AMT taxable income. However, a child who files Form 8615 has a limited exemption amount. The child's exemption amount for 2009 is limited to the child's earned income plus $6,700. Figure the child's allowable exemption amount on the worksheet in the instructions for Form 6251, line 30.
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Illustrated Example(p25)


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This example shows how to fill out Forms 8615 and 1040A for Sara Brown. It also shows how to use the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040A instructions to figure Sara's tax.
John and Laura Brown have one child, Sara. She is 13 and has $1,050 taxable interest, $1,050 qualified dividend income, $700 capital gain distributions, and $1,550 earned income. She does not itemize deductions. John and Laura file a joint return with John's name and social security number listed first. They claim three exemptions, including an exemption for Sara, on their return.
Because she is under age 18 and has more than $1,900 investment income, part of her income may be subject to tax at her parents' rate. A completed Form 8615 must be attached to her return.
Sara's father, John, fills out Sara's return. He completes her Form 1040A through line 27, then begins completing her Form 8615.
John enters his name and social security number on Sara's Form 8615 because his name and number are listed first on the joint return he and Laura are filing. He checks the box for married filing jointly.
He enters Sara's investment income, $2,800, on line 1. Sara does not itemize deductions, so John enters $1,900 on line 2. He enters $900 ($2,800 − $1,900) on line 3.
Sara's taxable income, as shown on her Form 1040A, line 27, is $2,500. This is her total income ($4,350) minus her standard deduction ($1,850). Her standard deduction is limited to the amount of her earned income plus $300. John enters $2,500 on line 4.
John compares lines 3 and 4 and enters the smaller amount, $900, on line 5.
John enters $48,000 on line 6. This is the taxable income from line 43 of John and Laura's joint Form 1040 return. Sara is an only child, so line 7 is blank. He adds line 5 ($900), line 6 ($48,000), and line 7 (blank) and enters $48,900 on line 8.
Because Sara's capital gain distributions and qualified dividends are included on line 5, John uses Line 5 Worksheet #1 (in the instructions for Form 8615) to figure out that $225 net capital gain and $337 qualified dividends are included on line 5. He completes that worksheet as follows.
Line 5 Worksheet #1
1.Enter the child's qualified dividends $1,050
2.Enter the child's net capital gain 700
3.Enter the amount from the child's Form 8615, line 1 2,800
4.Divide line 1 by line 3. Enter the result as a decimal (rounded to at least 3 places). Do not enter more than 1.000 .375
5.Divide line 2 by line 3. Enter the result as a decimal (rounded to at least 3 places). Do not enter more than 1.000 .250
6.Multiply $1,900 by line 4 713
7.Multiply $1,900 by line 5 475
8. Qualified dividends on Form 8615, line 5. Subtract line 6 from line 1 (but do not enter less than zero or more than the amount on Form 8615, line 5) 337
9. Net capital gain on Form 8615, line 5. Subtract line 7 from line 2 (but do not enter less than zero or more than the excess of Form 8615, line 5, over line 8 of this worksheet) 225
Sara's parents do not have a net capital gain or any qualified dividends, so no net capital gain or qualified dividends are on line 6 of Sara's Form 8615. Therefore, the amount of net capital gain on line 8 of Sara's Form 8615 is $225, and the amount of qualified dividends on that line is $337. John uses the Qualified Dividends and Capital Gain Tax Worksheet (in the Form 1040A instructions) and follows the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 9 tax in the Form 8615 instructions to figure the tax to enter on Sara's Form 8615, line 9.
John enters $337 on line 2 of the Qualified Dividends and Capital Gain Tax Worksheet, and $225 on line 3 of that worksheet. That completed worksheet is shown later as Filled-in Qualified Dividends and Capital Gain Tax Worksheet #1. John enters the tax of $6,414 on Sara's Form 8615, line 9.
He enters the tax from his and Laura's Form 1040 ($6,369) on Sara's Form 8615, line 10, then subtracts that amount from the $6,414 on line 9, and enters the $45 remainder on line 11. Because line 7 is blank, John skips lines 12a and 12b and enters $45 on line 13.
John subtracts line 5 ($900) from line 4 ($2,500) and enters the result, $1,600, on line 14. Using the instructions for line 14 earlier, John subtracts the net capital gain included on line 5 ($225) from Sara's net capital gain ($700) to figure the $475 net capital gain included on line 14. He also subtracts the qualified dividends included on line 5 ($337) from Sara's qualified dividends ($1,050) to figure the $713 qualified dividends included on line 14. He uses another Qualified Dividends and Capital Gain Tax Worksheet and follows the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 15 tax, in the Form 8615 instructions, to figure the $41 tax to enter on Form 8615, line 15. That completed worksheet is shown later as Filled-in Qualified Dividends and Capital Gain Tax Worksheet #2.
John adds lines 13 and 15 of Form 8615, and enters the sum, $86, on line 16. Then he uses another Qualified Dividends and Capital Gain Tax Worksheet to figure the $76 tax on Sara's $2,500 taxable income to enter on Form 8615, line 17. That completed worksheet is shown later as Filled-in Qualified Dividends and Capital Gain Tax Worksheet #3.
Finally, John compares lines 16 and 17 and enters the larger amount, $86, on line 18 of Sara's Form 8615. He also enters that amount on Sara's Form 1040A, line 28.
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Form 1040A, page 1, for Sara L. Brown Text DescriptionForm 1040A, page 1, for Sara L. Brown  
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Form 1040A, page 2, for Sara L. Brown Text DescriptionForm 1040A, page 2, for Sara L. Brown  
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Form 8615 for Sara L. Brown Text DescriptionForm 8615 for Sara L. Brown  
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Filled-in Qualified Dividends and Capital Gain Tax Worksheet #1

  • Be sure you do not have to file Form 1040 (see the instructions for Form 1040A, line 10)
1.Enter the amount from Form 1040A, line 271. 48,900*    
2.Enter the amount from Form 1040A, line 9b2. 337*      
3.Enter the amount from Form 1040A, line 103. 225*      
4.Add lines 2 and 34.   562    
5.Subtract line 4 from line 1. If zero or less, enter -0-5. 48,338    
6.Enter the smaller of:       
 • The amount on line 1, or         
 • $33,950 if single or married filing separately,        
   $67,900 if married filing jointly or qualifying widow(er), or Right brace 6. 48,900*    
   $45,500 if head of household.         
7.Is the amount on line 5 equal to or more than the amount on line 6?     
  Yes. Skip lines 7 and 8; go to line 9 and check the "No" box.     
  No. Enter the amount from line 57. 48,338    
8.Subtract line 7 from line 68.   562    
9.Are the amounts on lines 4 and 8 the same?     
  Yes. Skip lines 9 through 12; go to line 13. 
  No. Enter the smaller of line 1 or line 49.                 
10.Enter the amount from line 8 (if line 8 is blank, enter -0-)10.                 
11.Subtract line 10 from line 911.                 
12.Multiply line 11 by 15% (.15)12.               
13.Figure the tax on the amount on line 5. Use the Tax Table on pages 68-79. Enter the tax here13. 6,414  
14.Add lines 12 and 1314. 6,414  
15.Figure the tax on the amount on line 1. Use the Tax Table on pages 68-79. Enter the tax here15. 6,504  
16. Tax on all taxable income. Enter the smaller of line 14 or line 15 here and on Form 1040A, line 2816. 6,414  
  
 *See the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 9 tax in the Form 8615 instructions.
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Filled-in Qualified Dividends and Capital Gain Tax Worksheet #2

  • Be sure you do not have to file Form 1040 (see the instructions for Form 1040A, line 10)
1.Enter the amount from Form 1040A, line 271. 1,600*    
2.Enter the amount from Form 1040A, line 9b2. 713*      
3.Enter the amount from Form 1040A, line 103. 475*      
4.Add lines 2 and 34. 1,188    
5.Subtract line 4 from line 1. If zero or less, enter -0-5. 412    
6.Enter the smaller of:       
 • The amount on line 1, or         
 • $33,950 if single or married filing separately,        
   $67,900 if married filing jointly or qualifying widow(er), or Right brace 6. 1,600*    
   $45,500 if head of household.         
7.Is the amount on line 5 equal to or more than the amount on line 6?     
  Yes. Skip lines 7 and 8; go to line 9 and check the "No" box.     
  No. Enter the amount from line 57. 412    
8.Subtract line 7 from line 68. 1,188    
9.Are the amounts on lines 4 and 8 the same?     
  Yes. Skip lines 9 through 12; go to line 13. 
  No. Enter the smaller of line 1 or line 49.                 
10.Enter the amount from line 8 (if line 8 is blank, enter -0-)10.                 
11.Subtract line 10 from line 911.                 
12.Multiply line 11 by 15% (.15)12.               
13.Figure the tax on the amount on line 5. Use the Tax Table on pages 68-79. Enter the tax here13. 41*  
14.Add lines 12 and 1314. 41  
15.Figure the tax on the amount on line 1. Use the Tax Table on pages 68-79. Enter the tax here15. 161*  
16. Tax on all taxable income. Enter the smaller of line 14 or line 15 here and on Form 1040A, line 2816. 41  
  
 *See the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 15 tax in the Form 8615 instructions.
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Filled-in Qualified Dividends and Capital Gain Tax Worksheet #3

  • Be sure you do not have to file Form 1040 (see the instructions for Form 1040A, line 10)
1.Enter the amount from Form 1040A, line 271. 2,500    
2.Enter the amount from Form 1040A, line 9b2. 1,050      
3.Enter the amount from Form 1040A, line 103. 700      
4.Add lines 2 and 34. 1,750    
5.Subtract line 4 from line 1. If zero or less, enter -0-5. 750    
6.Enter the smaller of:       
 • The amount on line 1, or         
 • $33,950 if single or married filing separately,        
   $67,900 if married filing jointly or qualifying widow(er), or Right brace 6. 2,500    
   $45,500 if head of household.         
7.Is the amount on line 5 equal to or more than the amount on line 6?     
  Yes. Skip lines 7 and 8; go to line 9 and check the "No" box.     
  No. Enter the amount from line 57. 750    
8.Subtract line 7 from line 68. 1,750    
9.Are the amounts on lines 4 and 8 the same?     
  Yes. Skip lines 9 through 12; go to line 13. 
  No. Enter the smaller of line 1 or line 49.                 
10.Enter the amount from line 8 (if line 8 is blank, enter -0-)10.                 
11.Subtract line 10 from line 911.                 
12.Multiply line 11 by 15% (.15)12.               
13.Figure the tax on the amount on line 5. Use the Tax Table on pages 68-79. Enter the tax here13. 76  
14.Add lines 12 and 1314. 76  
15.Figure the tax on the amount on line 1. Use the Tax Table on pages 68-79. Enter the tax here15. 251  
16. Tax on all taxable income. Enter the smaller of line 14 or line 15 here and on Form 1040A, line 2816. 76  
  

Glossary


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Adjusted gross income.(p32)

Gross income (defined later) minus adjustments to income (defined next).

Adjustments to income.(p32)

Deductions that are subtracted from gross income in figuring adjusted gross income. They include deductions for moving expenses, alimony paid, a penalty on early withdrawal of savings, and contributions to an individual retirement arrangement (IRA). Adjustments to income can be taken even if itemized deductions (defined later) are not claimed.

Alternative minimum tax.(p32)

A tax designed to collect at least a minimum amount of tax from taxpayers who benefit from the tax laws that give special treatment to certain kinds of income and allow deductions and credits for certain kinds of expenses.

Capital gain distribution.(p32)

An allocated amount paid to, or treated as paid to, a shareholder by a mutual fund, regulated investment company, or real estate investment trust from its net realized long-term capital gains. This amount is in addition to any ordinary dividend paid to the shareholder. You will receive a statement from the payer if this applies to you.

Dependent.(p32)

A person, other than the taxpayer or the taxpayer's spouse, for whom an exemption (defined later) can be claimed. To be your dependent, a person must be your qualifying child or qualifying relative (both defined later). For more information, see Exemptions for Dependents in Publication 501.

Earned income.(p32)

Salaries, wages, tips, professional fees, and other amounts received as pay for work actually done.
For purposes of determining a dependent's standard deduction, earned income also includes any part of a scholarship or fellowship grant that the dependent must include in his or her gross income.
For purposes of completing Form 8615, earned income also includes a taxable distribution from a qualified disability trust. It does not include investment income as defined under Line 1 (Investment Income).

Exemption.(p32)

An amount ($3,650 for 2009) that can be subtracted from income in figuring how much income will be taxed. Exemptions generally are allowed for the taxpayer, the taxpayer's spouse, and dependents.

Full-time student.(p32)

A child who during any part of 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. A school includes a technical, trade, or mechanical school. It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet.

Gross income.(p32)

All income from all sources (other than tax-exempt income) that must be included on your tax return. Gross income is the total of your earned and unearned income.

Investment income.(p32)

See Unearned income, later, and Investment income defined, earlier, under Line 1 (Investment Income).

Itemized deductions.(p32)

Deductions allowed on Schedule A (Form 1040) for medical and dental expenses, taxes, home mortgage interest and investment interest, charitable contributions, casualty and theft losses, and miscellaneous deductions. They are subtracted from adjusted gross income in figuring taxable income. Itemized deductions cannot be claimed if the standard deduction is chosen.

Net capital gain.(p32)

The excess of net long-term capital gain over any net short-term capital loss. For 2009, this is the smaller of the gain on line 15 or the gain on line 16 of Schedule D (Form 1040). If Schedule D is not required, net capital gain is the amount of capital gain distributions on Form 1040, line 13; Form 1040A, line 10; or Form 1040NR, line 14.

Net investment income.(p32)

The total of all investment income (other than tax-exempt income) reduced by the sum of:
  1. Any adjustments to income related to the investment income, plus
  2. The larger of:
    1. $950 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29 (or Schedule A (Form 1040NR), line 17), that are directly connected with producing the investment income, or
    2. $1,900.

Qualified dividends.(p32)

Dividends eligible for the lower tax rates that apply to a net capital gain. They are reported to you in box 1b of Form 1099-DIV. You report them on Form 1040 or Form 1040A, line 9b, or Form 1040NR, line 10b. For more information, see Publication 550.

Qualifying child.(p32)

To be your dependent (defined earlier), a person must be either your qualifying child or your qualifying relative (defined next). Generally, a person is your qualifying child if that person:
  • Is your child, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them,
  • Lived with you for more than half of the year,
  • Did not provide more than half of his or her own support for the year,
  • Was under age 19 at the end of the year and younger than you (or your spouse if filing jointly) (or was under age 24 at the end of the year, a student, and younger than you (or your spouse if filing jointly), or was any age and permanently and totally disabled), and
  • Did not file a joint return with his or her spouse.
For details, see Exemptions for Dependents in Publication 501.

Qualifying relative.(p33)

To be your dependent (defined earlier), a person must be either your qualifying child (defined earlier) or your qualifying relative. Generally, a person is your qualifying relative if that person:
  • Lives with or is related to you,
  • Does not have $3,650 or more of gross (total) income,
  • Is supported (generally more than 50%) by you, and
  • Is neither your qualifying child nor the qualifying child of anyone else.
For details, see Exemptions for Dependents in Publication 501.

Standard deduction.(p33)

An amount that can be subtracted from adjusted gross income in figuring taxable income. The standard deduction is not used if itemized deductions are claimed.

Support.(p33)

All amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. To figure your child's support, count support provided by you, your child, and others. However, a scholarship received by your child is not considered support if your child is a full-time student. See Publication 501 for details.

Tax year.(p33)

The time period covered by a tax return. Usually this is January 1 to December 31, a calendar year, but taxpayers can elect a fiscal tax year with different beginning and ending dates.

Taxable income.(p33)

Gross income minus any adjustments to income, any allowable exemptions, and either itemized deductions or the standard deduction.

Unearned income.(p33)

Income other than earned income. This is investment-type income and includes interest, dividends, and capital gains. Distributions of interest, dividends, capital gains, and other unearned income from a trust are also unearned income to a beneficiary of the trust. However, for purposes of completing Form 8615, a taxable distribution from a qualified disability trust is considered earned income.

Unrecaptured section 1250 gain.(p33)

Generally, any part of your net capital gain from selling section 1250 property (real property) that is due to depreciation. For details, see Publication 550.

28% rate gain.(p33)

Gain from the sale of collectibles and, generally, the taxable part of your gain from the sale of qualified small business stock held more than 5 years. For details, see the instructions for Schedule D (Form 1040).
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How To Get Tax Help(p33)


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You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. By selecting the method that is best for you, you will have quick and easy access to tax help.
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Contacting your Taxpayer Advocate.(p33)


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The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. Here are seven things every taxpayer should know about TAS:
  • TAS is your voice at the IRS.
  • Our service is free, confidential, and tailored to meet your needs.
  • You may be eligible for TAS help if you have tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should.
  • TAS helps taxpayers whose problems are causing financial difficulty or significant cost, including the cost of professional representation. This includes businesses as well as individuals.
  • TAS employees know the IRS and how to navigate it. We will listen to your problem, help you understand what needs to be done to resolve it, and stay with you every step of the way until your problem is resolved.
  • TAS has at least one local taxpayer advocate in every state, the District of Columbia, and Puerto Rico. You can call your local advocate, whose number is in your phone book, in Pub. 1546, Taxpayer Advocate Service—Your Voice at the IRS, and on our website at www.irs.gov/advocate. You can also call our toll-free line at 1-877-777-4778 or TTY/TDD 1-800-829-4059.
  • You can learn about your rights and responsibilities as a taxpayer by visiting our online tax toolkit at www.taxtoolkit.irs.gov.
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Low Income Taxpayer Clinics (LITCs).(p33)
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The Low Income Taxpayer Clinic program serves individuals who have a problem with the IRS and whose income is below a certain level. LITCs are independent from the IRS. Most LITCs can provide representation before the IRS or in court on audits, tax collection disputes, and other issues for free or a small fee. If an individual's native language is not English, some clinics can provide multilingual information about taxpayer rights and responsibilities. For more information, see Publication 4134, Low Income Taxpayer Clinic List. This publication is available at www.irs.gov, by calling 1-800-TAX-FORM (1-800-829-3676), or at your local IRS office.
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Free tax services.(p34)


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To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. It contains lists of free tax information sources, including publications, services, and free tax education and assistance programs. It also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on your telephone.
Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities.
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Free help with your return.(p34)


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Free help in preparing your return is available nationwide from IRS-trained volunteers. The Volunteer Income Tax Assistance (VITA) program is designed to help low-income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Many VITA sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. To find the nearest VITA or TCE site, call 1-800-829-1040.
As part of the TCE program, AARP offers the Tax-Aide counseling program. To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website at 
www.aarp.org/money/taxaide.
For more information on these programs, go to  
www.irs.gov and enter keyword "VITA" in the upper right-hand corner.
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Internet. You can access the IRS website at www.irs.gov 24 hours a day, 7 days a week to:
  • E-file your return. Find out about commercial tax preparation and e-file services available free to eligible taxpayers.
  • Check the status of your 2009 refund. Go to  
    www.irs.gov and click on Where's My Refund. Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Have your 2009 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund.
  • Download forms, instructions, and publications.
  • Order IRS products online.
  • Research your tax questions online.
  • Search publications online by topic or keyword.
  • Use the online Internal Revenue Code, Regulations, or other official guidance.
  • View Internal Revenue Bulletins (IRBs) published in the last few years.
  • Figure your withholding allowances using the withholding calculator online at www.irs.gov/individuals.
  • Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant.
  • Sign up to receive local and national tax news by email.
  • Get information on starting and operating a small business.
Phone
Phone. Many services are available by phone.  
  • Ordering forms, instructions, and publications. Call 1-800-TAX FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. You should receive your order within 10 days.
  • Asking tax questions. Call the IRS with your tax questions at 1-800-829-1040.
  • Solving problems. You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Call your local Taxpayer Assistance Center for an appointment. To find the number, go to www.irs.gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service.
  • TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications.
  • TeleTax topics. Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics.
  • Refund information. To check the status of your 2009 refund, call 1-800-829-1954 during business hours or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Have your 2009 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Refunds are sent out weekly on Fridays. If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back.
  • Other refund information. To check the status of a prior year refund or amended return refund, call 1-800-829-1954.
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Evaluating the quality of our telephone services. To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. One method is for a second IRS representative to listen in on or record random telephone calls. Another is to ask some callers to complete a short survey at the end of the call.
Walk In
Walk-in. Many products and services are available on a walk-in basis. 
  • Products. You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. Also, some IRS offices and libraries have the Internal Revenue Code, Regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes.
  • Services. You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. No appointment is necessary—just walk in. If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. All other issues will be handled without an appointment. To find the number of your local office, go to  
    www.irs.gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service.
Due date
Mail. You can send your order for forms, instructions, and publications to the address below. You should receive a response within 10 days after your request is received.

 
Internal Revenue Service 
1201 N. Mitsubishi Motorway 
Bloomington, IL 61705-6613


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DVD for tax products. You can order Publication 1796, IRS Tax Products DVD, and obtain:
  • Current-year forms, instructions, and publications.
  • Prior-year forms, instructions, and publications.
  • Tax Map: an electronic research tool and finding aid.
  • Tax law frequently asked questions.
  • Tax Topics from the IRS telephone response system.
  • Internal Revenue Code—Title 26 of the U.S. Code.
  • Fill-in, print, and save features for most tax forms.
  • Internal Revenue Bulletins.
  • Toll-free and email technical support.
  • Two releases during the year. 
    – The first release will ship the beginning of January 2010. 
    – The final release will ship the beginning of March 2010.
Purchase the DVD from National Technical Information Service (NTIS) at www.irs.gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee).