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Form 8615 Tax for Children under 18 with Investment Income of More Than $2100

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Question
Form 8615 Tax for Children under 18 with Investment Income of More Than $2100

Answer
Purpose of Form
What’s New:  Change in tax rates. The Tax Cuts and Jobs Act of 2017 has modified the tax rates and brackets that you will use to figure the tax on your 2018 unearned income. Your tax rate is no longer affected by the tax situation of your parents or the unearned income of any siblings. Instead, all net unearned income over a threshold amount of $2,100 for 2018 is taxed using the brackets and rates for estates and trusts. These are shown in the following chart.

2018 Estate and Trust Income Tax Rates

If your taxable income is:                                       Your tax is:

not over $2,550                                                     10% of taxable income.

over $2,550 but not over $9,150                             $255 plus 24% of the excess over $2,550.

over $9,150 but not over $12,500                           $3,011.50 plus 37% of the excess over $12,500.

Investment Income - For Form 8615, investment income includes all taxable income other than earned income. Investment income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, etc. It alo includes taxable social security benefits, pension and annuity income, and income (other than earned income) received as the beneficiary of the trust.
Who Must File - Form 8615 must be filed for any child who meets all the following conditions
  1. The child had more than $2,100 of investment income.
  2. The child is required to file a tax return.
  3. The child either:
  • Was under age 18 at the end of the tax year,
  • Was age 18 at the end of the year and did not have earned income that was more than half of the childs support, or
  • Was a full-time student over age 18 and under age 24  and did not have earned income that was more than half of the childs support.
   4.    At least one of the childs parents was alive at the end of the tax year.
    5.    The child does not file a joint return

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Views: 1461 Created on: Jun 15, 2013
Date updated: Dec 10, 2018
Posted in: Income

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