Userid: CPM Schema: instrx Leadpct: 100% Pt. size: 8.5 Draft Ok to Print AH XSL/XML Fileid: … ions/I8615/2020/A/XML/Cycle05/source (Init. & Date) _______ Page 1 of 6 14:29 - 8-Feb-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury 2020 Internal Revenue Service Instructions for Form 8615 Tax for Certain Children Who Have Unearned Income Section references are to the Internal Revenue Code unless 3. The child either: otherwise noted. a. Was under age 18 at the end of 2020, b. Was age 18 at the end of 2020 and didn’t have earned Future Developments income that was more than half of the child's support, or c. Was a full-time student at least age 19 and under age 24 at For the latest information about developments related to Form 8615 the end of 2020 and didn’t have earned income that was more than and its instructions, such as legislation enacted after they were half of the child's support. published, go to IRS.gov/Form8615. (Earned income is defined later. Support is defined below.) What’s New 4. At least one of the child's parents was alive at the end of Change in tax rates. Recent legislation modified the tax rates and 2020. brackets used to figure the tax on 2020 unearned income for certain 5. The child doesn’t file a joint return for 2020. children. For tax year 2020, dependent children with unearned income above a certain amount are taxed at the parents' individual For these rules, the term “child” includes a legally adopted child tax rate. Taxpayers may also elect to retroactively use the tax rates and a stepchild. These rules apply whether or not the child is a based on the parents’ individual tax rate for dependent children with dependent. These rules don’t apply if neither of the child’s parents unearned income in tax years 2018 and 2019. were living at the end of the year. Support. Your support includes all amounts spent to provide the Reminder child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. To figure Election to modify the tax on your unearned income. Recent your child’s support, count support provided by you, your child, and legislation allows for taxpayers to elect to modify their tax on others. However, a scholarship received by your child isn’t dependent children with unearned income for tax years 2018 and considered support if your child is a full-time student. For details, 2019. The election allows taxpayers to recalculate the tax on see Pub. 501, Dependents, Standard Deduction, and Filing dependent children with unearned income for these years to be Information. based on the parent’s individual tax rate instead of the previous tax rates (condensed trust and estates tax rates). Certain January 1 birthdays. Use the following chart to determine For tax years 2018 and 2019, if you choose to modify the tax on whether certain children with January 1 birthdays meet condition 3 your unearned income using the tentative tax based on the tax rate under Who Must File. of your parent, you will need to use the 2018 or 2019 Instructions for Form 8615 and file an amended return, Form 1040-X. See IRS.gov/ IF you were born on... THEN, at the end of 2020, Form1040X for more information about amending a tax return. If you make this election, include a statement or an attachment with your you are considered to be... amended return specifying “election to modify tax on unearned January 1, 2003 18* income.” January 1, 2002 19** General Instructions January 1, 1997 24*** Purpose of Form *This child isn't under age 18. The child meets condition 3 only if the child didn't have earned income that was more than half of the child's For children under age 18 and certain older children described support. below in Who Must File, unearned income over $2,200 is taxed at the parent's rate if the parent's rate is higher than the child's. If the **This child meets condition 3 only if the child was a full-time student child's unearned income is more than $2,200, use Form 8615 to who didn't have earned income that was more than half of the child's figure the child's tax. support. ***Don’t use Form 8615 for this child. Unearned Income For Form 8615, “unearned income” includes all taxable income other than earned income. Unearned income includes taxable interest, The parent may be able to elect to report the child’s interest, ordinary dividends, capital gains (including capital gain TIP ordinary dividends, and capital gain distributions on the distributions), rents, royalties, etc. It also includes taxable social parent’s return. If the parent makes this election, the child security benefits, pension and annuity income, taxable scholarship won’t have to file a return or Form 8615. However, the federal and fellowship grants not reported on Form W-2, unemployment income tax on the child’s income, including qualified dividends and compensation, alimony, and income (other than earned income) capital gain distributions, may be higher if this election is made. For received as the beneficiary of a trust. more details, see Form 8814, Parents’ Election To Report Child's Who Must File Interest and Dividends. Form 8615 must be filed for any child who meets all of the following conditions. Additional Information For more details, see Pub. 929, Tax Rules for Children and 1. The child had more than $2,200 of unearned income. Dependents. 2. The child is required to file a tax return. Feb 08, 2021 Cat. No. 28914R Page 2 of 6 Fileid: … ions/I8615/2020/A/XML/Cycle05/source 14:29 - 8-Feb-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. • Files Form 2555 (relating to foreign earned income), Incomplete Information for Filing • Has a net loss from self-employment, or If the parent's taxable income, filing status, or net unearned income • Claims a net operating loss deduction. of the parent's other children isn't known by the due date of the child’s return, reasonable estimates can be used. Enter “Estimated” Earned income. Earned income includes wages, tips, and other next to the appropriate line(s) of Form 8615. When the correct payments received for personal services performed. information is available, file Form 1040-X, Amended U.S. Individual If the child is a sole proprietor or a partner in a trade or business Income Tax Return. in which both personal services and capital are material income-producing factors, earned income also includes a Instead of using estimates, the child can get an automatic reasonable allowance for compensation for personal services, but 6-month extension of time to file. For details, see Form 4868, not more than 30% of the child’s share of the net profits from that Application for Automatic Extension of Time To File U.S. Individual trade or business (after subtracting the deduction for one-half of Income Tax Return. self-employment tax). However, the 30% limit doesn’t apply if there An extension of time to file isn’t an extension of time to pay. are no net profits from the trade or business. ! If capital isn’t an income-producing factor and the child’s CAUTION personal services produced the business income, all of the child’s gross income from the trade or business is considered earned Amended Return income. In that case, earned income is generally the total of the If the parent’s income changes after the child’s return is filed, the tax amounts reported on Form 1040, line 1; Schedule 1 (Form 1040), must be refigured using the adjusted amounts. The child's tax must lines 3 and 6; or Form 1040-NR, line 1a. also be refigured if there are changes to the net unearned income of Earned income also includes any taxable distribution from a other children for whom the parent is required to file a Form 8615. If qualified disability trust. A qualified disability trust is any nongrantor the child's tax changes, file Form 1040-X to correct the child's tax. trust: Alternative Minimum Tax 1. Described in 42 U.S.C. 1396p(c)(2)(B)(iv) and established solely for the benefit of an individual under 65 years of age who is A child whose tax is figured on Form 8615 may owe the alternative disabled, and minimum tax. For details, see Form 6251, Alternative Minimum 2. All the beneficiaries of which are determined by the Tax—Individuals, and its instructions. Commissioner of Social Security to have been disabled for some Net Investment Income Tax part of the tax year within the meaning of 42 U.S.C. 1382c(a)(3). A child whose tax is figured on Form 8615 may be subject to the Net A trust won’t fail to meet (2) above just because the trust’s corpus Investment Income Tax (NIIT). NIIT is a 3.8% tax on the lesser of net may revert to a person who isn’t disabled after the trust ceases to investment income or the excess of the child’s modified adjusted have any disabled beneficiaries. gross income (MAGI) over the threshold amount. Use Form 8960, Net Investment Income Tax, to figure this tax. For more information on NIIT, go to IRS.gov/NIIT.