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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. Recent legislation modified the tax rates and brackets used to figure the tax on 2020 unearned income for certain children. For tax year 2020, dependent children with unearned income above a certain amount are taxed at the parents' individual tax rate. Taxpayers may also elect to retroactively use the tax rates based on the parents’ individual tax rate for dependent children with unearned income in tax years 2018 and 2019.

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 $2,200 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: 1791 Created on: Jun 15, 2013
Date updated: Nov 30, 2020
Posted in: Income

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