92964349YTax Rules for
Children and
DependentsWhat's New1Reminders1Introduction2Part 1. Rules for All Dependents2Filing Requirements2Should a Return Be Filed Even If Not Required?4Responsibility for Child's Return4Standard Deduction5Dependent's Own Exemption5Withholding From Wages5Part 2. Tax on Investment Income of Child Under 146Parent's Election To Report Child's Interest and Dividends6Tax for Children Under Age 14 Who Have Investment Income of More Than $1,6009Glossary23How To Get Tax Help23Index25What's NewFiling requirements.Filing requirements
The amount of gross income that many dependents with earned income (wages, tips, etc.) can have during the year without having to file a return has
increased. See Filing Requirements in Part 1.
Standard deduction.Standard deduction
The standard deduction for many dependents with earned income (wages, tips, etc.) has increased. See Standard Deduction in Part
1.
Alternative minimum tax.Alternative minimum tax (AMT)
The limit on the exemption amount for figuring the alternative minimum tax of a child filing Form 8615 has increased to the child's earned income
plus $5,850 (previously $5,750). See Alternative Minimum Tax in Part 2.
RemindersSocial security number (SSN).Dependents:Social security numbers (SSNs) ofSocial security numbers (SSNs) of dependents
Dependents who are required to file a tax return must have an SSN. To apply for an SSN, file Form SS-5 with the Social Security Administration. It
usually takes about 2 weeks to get an SSN.
Individual taxpayer identification number (ITIN).Aliens:Individual taxpayer identification number (ITIN)Individual taxpayer identification numbers (ITINs)
The IRS will issue an ITIN to a nonresident or resident alien who does not have and is not eligible to get an SSN. To apply for an ITIN, file Form
W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. It usually takes about 4 to 6 weeks to get an ITIN. The ITIN is
entered wherever an SSN is requested on a tax return. If you are a nonresident alien applying for an ITIN to file a tax return, you generally must
attach your original, completed return to Form W-7 to get an ITIN. If you are required to include another person's SSN on your return and that person
does not have and cannot get an SSN, enter that person's ITIN.
An ITIN is for tax use only. It does not entitle you to social security benefits or change your employment or immigration status under U.S. law.
Photographs of missing children.Missing children, photographs of
The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children
selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
Part 1 of this publication explains the filing requirements and other tax information for individuals who can be claimed as a dependent
on another person's tax return.
Part 2 explains how to report and figure the tax on certain investment income of children under age 14 (whether or not they can be
claimed as dependents).
Definitions.
Many of the terms used in this publication, such as dependent,earned income, and unearned income, are defined in the
Glossary at the back of this publication.
Comments and suggestions.Comments on publicationSuggestions for publication
We welcome your comments about this publication and your suggestions for future editions.
You can write to us at the following address:
Internal Revenue Service
Individual Forms and Publications Branch
SE:W:CAR:MP:T:I
1111 Constitution Ave. NW, IR-6406
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in
your correspondence.
You can email us at
*taxforms@irs.gov. (The asterisk must be included in the
address.) Please put Publications Comment on the subject line. Although we cannot respond individually to each email, we do appreciate your
feedback and will consider your comments as we revise our tax products.
Tax questions.
If you have a tax question, visit
www.irs.gov or call 1-800-829-1040. We cannot answer tax questions at either
of the addresses just listed.
Ordering forms and publications.
Visit
www.irs.gov/formspubs
to download forms and publications, call 1-800-829-3676, or write to the address shown under How To Get Tax Help in the back of this
publication.
Publication501Exemptions, Standard Deduction, and Filing InformationForm (and Instructions)Employee's Withholding Allowance CertificateTax for Children Under Age 14 With Investment Income of More Than $1,600Parents' Election To Report Child's Interest and Dividends
See How To Get Tax Help near the end of this publication for information about getting these publications and forms.
Part 1. Rules for
All Dependents
Dependent
Earned income
Exemption
Gross income
Itemized deductions
Standard deduction
Unearned income
This part of the publication discusses the filing requirements for dependents, who is responsible for a child's return, how to figure a dependent's
standard deduction and exemption (if any), and whether a dependent can claim exemption from federal income tax withholding.
Filing requirementsFiling Requirements
Whether a dependent has to file a return generally depends on the amount of the dependent's earned and unearned income and whether the dependent is
married, is age 65 or older, or is blind.
A dependent may have to file a return even if his or her income is below the amount that would normally require a return. See Other Filing
Requirements, later.
The following sections apply to dependents with:
Earned income only,
Unearned income only, and
Both earned and unearned income.
To find out whether a dependent must file, read the section that applies, or use Table 1 on the previous page.
Earned Income OnlyEarned income
A dependent must file a return if all his or her income is earned income, and the total is more than the amount listed in the following table.
Marital StatusAmountSingleUnder 65 and not blind $5,000Either 65 or older or blind $6,25065 or older and blind $7,500Married*Under 65 and not blind $5,000Either 65 or older or blind $6,00065 or older and blind $7,000*If a dependent's spouse itemizes deductions on a separate return, the dependent must file a
return if the dependent has $5 or more of gross income (earned and/or unearned).
Example.
William is 16. His mother claims an exemption for him on her income tax return. He worked part time on weekends during the school year and full
time during the summer. He earned $5,600 in wages. He did not have any unearned income.
He must file a tax return because he has earned income only and his total income is more than $5,000. If he were blind, he would not have to file a
return because his total income is not more than $6,250.
Unearned Income OnlyUnearned income
A dependent must file a return if all his or her income is unearned income, and the total is more than the amount listed in the following table.
Marital StatusAmountSingleUnder 65 and not blind $ 800Either 65 or older or blind $2,05065 or older and blind $3,300Married*Under 65 and not blind $ 800Either 65 or older or blind $1,80065 or older and blind $2,800*If a dependent's spouse itemizes deductions on a separate return, the dependent must file a
return if the dependent has $5 or more of gross income (earned and/or unearned).
Example.
Sarah is 18 and single. Her parents can claim an exemption for her on their income tax return. She received $850 of taxable interest and dividend
income. She did not work during the year.
She must file a tax return because she has unearned income only and her total income is more than $800. If she were blind, she would not have to
file a return because she has unearned income only and her total income is not more than $2,050.
Election to report child's unearned income on parent's return.Election to include child's income on parent's return:Child's unearned income
A parent of a child under age 14 may be able to elect to include the child's interest and dividend income on the parent's return. See Parent's
Election To Report Child's Interest and Dividends in Part 2. If the parent makes this election, the child does not have to file a
return.
Earned and
Unearned IncomeEarned incomeUnearned income
A dependent who has both earned and unearned income generally must file a return if the total income is more than line 5 of the following
worksheet.
Filing Requirement Worksheet for Most Dependents 1. Enter dependent's earned
income plus $2502. Minimum amount $ 8003. Compare lines 1 and 2. Enter
the larger amount 4. Maximum amount5,0005. Compare lines 3 and 4. Enter
the smaller amount 6. Enter the dependent's gross
(total) income. If line 6 is more than line 5, the dependent must file an income tax return. If the dependent is married and his or her
spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more.
Worksheets:Earned and unearned income of dependent
<ROM>Table 1.</ROM> 2005 Filing Requirements for DependentsIf your parent (or someone else) can claim you as a dependent, use this table to see if you must file a
return. See the definitions of dependent,earned income, and unearned income in the
Glossary.Single dependents—Were you either age 65 or older or blind?No. You must file a return if any of the following apply.
Your unearned income was over $800.
Your earned income was over $5,000.
Your gross income was more than the larger of:
$800, or
Your earned income (up to $4,750) plus $250.
Yes. You must file a return if any of the following apply.
Your unearned income was over $2,050 ($3,300 if 65 or over and blind),
Your earned income was over $6,250 ($7,500 if 65 or older and blind),
Your gross income was more than—
The larger of:This amount:
$800, or
Your earned income (up to $4,750) plus $250
PLUS$1,250 ($2,500 if 65
or older and blind)Married dependents—Were you either age 65 or older or blind?No. You must file a return if any of the following apply.
Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.
Your unearned income was over $800.
Your earned income was over $5,000.
Your gross income was more than the larger of:
$800, or
Your earned income (up to $4,750) plus $250.
Yes. You must file a return if any of the following apply.
Your gross income was at least $5 and your spouse files a separate return and itemizes deductions.
Your unearned income was over $1,800 ($2,800 if 65 or over and blind),
Your earned income was over $6,000 ($7,000 if 65 or older and blind),
Your gross income was more than—
The larger of:This amount:
$800, or
Your earned income (up to $4,750) plus $250
PLUS$1,000 ($2,000 if 65
or older and blind)
Filing requirements:2005, for dependents (Table 1)Tables and figures:Filing requirements for dependents (Table 1)
Joe is 20, single, not blind, and a full-time college student. His parents provide most of his support and claim an exemption for him on their
income tax return. He received $200 taxable interest income and earned $2,750 from a part-time job.
He does not have to file a tax return because his total income of $2,950 ($200 interest plus $2,750 in wages) is not more than $3,000, the amount
on line 5 of his filled-in Filing Requirement Worksheet for Most Dependents (shown next).
Filing Requirement Worksheet for Most Dependents 1. Enter dependent's earned
income plus $250$ 3,0002. Minimum amount 8003. Compare lines 1 and 2. Enter
the larger amount 3,0004. Maximum amount5,0005. Compare lines 3 and 4. Enter
the smaller amount 3,0006. Enter the dependent's gross (total) income. If line 6 is more than line 5, the dependent must
file an income tax return. If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file
an income tax return if line 6 is $5 or more.$ 2,950
Example 2.
The facts are the same as in Example 1 except that Joe had $600 taxable interest income.
He must file a tax return because his total income of $3,350 ($600 interest plus $2,750 wages) is more than $3,000, the amount on line 5 of his
filled-in worksheet (shown next).
Filing Requirement Worksheetfor Most Dependents1. Enter dependent's earned
income plus $250$ 3,0002. Minimum amount 8003. Compare lines 1 and 2. Enter
the larger amount 3,0004. Maximum amount5,0005. Compare lines 3 and 4. Enter
the smaller amount 3,0006. Enter the dependent's gross (total) income. If line 6 is more than line 5, the dependent must
file an income tax return. If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file
an income tax return if line 6 is $5 or more.$ 3,350
Age 65 or older dependentsFiling requirements:Age 65 or older dependentsFiling requirements:Blind dependentsAge 65 or older or blind. A dependent who is age 65 or older or blind must file a return if his
or her gross (total) income is more than line 7 of the following worksheet.
Age 65 or older dependents:Filing requirement worksheet forBlind dependents:Filing requirement worksheet forWorksheets:Dependent's filing requirement
Filing Requirement Worksheet
for Dependents
Who Are Age 65 or Older or Blind1. Enter dependent's earned
income plus $2502. Minimum amount $ 8003. Compare lines 1 and 2. Enter
the larger amount 4. Maximum amount5,0005. Compare lines 3 and 4. Enter
the smaller amount 6. Enter the amount from the following table that applies to the dependent Marital StatusAmountSingleEither 65 or older or blind $1,25065 or older and blind $2,500MarriedEither 65 or older or blind $1,00065 or older and blind $2,0007. Add lines 5 and 6. Enter the total 8. Enter the dependent's gross (total) income. If line 8 is more than line 7, the dependent must
file an income tax return. If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must
file an income tax return if line 8 is $5 or more.
Example 3.
The facts are the same as in Example 2 except that Joe is also blind. He does not have to file a return because his total income of
$3,350 is not more than $4,250, the amount on line 7 of his filled-in Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or
Blind (shown next).
Filing Requirement Worksheet
for Dependents
Who Are Age 65 or Older or Blind1. Enter dependent's earned
income plus $250$3,0002. Minimum amount 8003. Compare lines 1 and 2. Enter
the larger amount 3,0004. Maximum amount5,0005. Compare lines 3 and 4. Enter
the smaller amount 3,0006. Enter the amount from the following table that applies to the dependent 1,250Marital StatusAmountSingleEither 65 or older or blind $1,25065 or older and blind $2,500MarriedEither 65 or older or blind $1,00065 or older and blind $2,0007. Add lines 5 and 6. Enter the total 4,2508. Enter the dependent's gross (total) income. If line 8 is more than line 7, the dependent
must file an income tax return. If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent
must file an income tax return if line 8 is $5 or more.$3,350
Other Filing Requirements
Some dependents may have to file a tax return even if their income is below the amount that would normally require them to file a return.
A dependent must file a tax return if he or she owes any other taxes, such as:
Social security and Medicare taxes on tips not reported to his or her employer,
Uncollected social security and Medicare or railroad retirement taxes on tips reported to his or her employer or on group-term life
insurance,
Alternative minimum tax,
Recapture taxes, such as the tax from recapture of an education credit, or
Alternative minimum tax (AMT)
Tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. But if the dependent is filing
a return only because of this tax, the dependent can file Form 5329 by itself.
Recapture taxes
A dependent must also file a tax return if he or she:
Received any advance earned income credit payments from his or her employers in 2005,
Filing requirements-other:Advance earned income credit payments
Had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and
Medicare taxes, or
Filing requirements-other:Wages from church or qualified church-controlled organizations
Had net earnings from self-employment of at least $400.
A dependent must file a return if the dependent's spouse itemizes deductions on a separate return and the dependent has $5 or more of gross income
(earned and/or unearned).
Filing requirements:Filing even if not requiredReturns:Filing even if not requiredShould a Return Be Filed Even If Not Required?
Even if a dependent does not meet any of the filing requirements discussed earlier, he or she should file a tax return if either of the following
applies.
Income tax was withheld from his or her income.
He or she qualifies for the earned income credit, the additional child tax credit, or the health coverage tax credit. See the tax return
instructions to find out who qualifies for these credits.
By filing a return, the dependent can get a refund.
Filing requirementsChild's return:Responsibility forReturns:Responsibility for child's returnResponsibility for Child's Return
Generally, the child is responsible for filing his or her own tax return and for paying any tax, penalties, or interest on that return. If a child
cannot file his or her own return for any reason, such as age, the child's parent or guardian is responsible for filing a return on his or her behalf.
Signing the child's return.Returns:Signing child's returnSigning child's return
If the child cannot sign his or her return, a parent or guardian can sign the child's name in the space provided at the bottom of the tax return.
Then, he or she should add: By (signature), parent (or guardian) for minor child.
Authority of parent or guardian.
A parent or guardian who signs a return on a child's behalf can deal with the IRS on all matters connected with the return.
In general, a parent or guardian who does not sign the child's return can only provide information concerning the child's return and pay the
child's tax. That parent or guardian is not entitled to receive information from the IRS or legally bind the child to a tax liability arising from the
return.
Third party designee.Third party designee
A child's parent or guardian who does not sign the child's return may be authorized, as a third party designee, to discuss the processing of the
return with the IRS as well as provide information concerning the return. The child or the person signing the return on the child's behalf must check
the Yes box in the Third Party Designee area of the return and name the parent or guardian as the designee.
If designated, a parent or guardian can respond to certain IRS notices and receive information about the processing of the return and the status of
a refund or payment. This designation does not authorize the parent or guardian to receive any refund check, bind the child to any tax liability, or
otherwise represent the child before the IRS. See the return instructions for more information.
Designated as representative.Form 2848
A parent or guardian who does not sign the child's return may be designated as the child's representative by the child or the person signing the
return on the child's behalf. Form 2848, Power of Attorney and Declaration of Representative, is used to designate a child's representative. See
Publication 947, Practice Before the IRS and Power of Attorney, for more information.
If designated, a parent or guardian can receive information about the child's return but cannot legally bind the child to a tax liability unless
authorized to do so by the law of the state in which the child lives.
IRS notice.IRS notice sent to child
If you or the child receives a notice from the IRS concerning the child's return or tax liability, you should immediately inform the IRS that the
notice concerns a child. The notice will show who to contact. The IRS will try to resolve the matter with the parent(s) or guardian(s) of the child
consistent with their authority.
Child's earnings.Child's earnings
For federal income tax purposes, the income a child receives for his or her personal services (labor) is the child's, even if, under state law, the
parent is entitled to and receives that income.
If the child does not pay the tax due on this income, the parent may be liable for the tax.
Child's expenses.Child's expenses
Deductions for payments that are made out of a child's earnings are the child's, even if the payments are made by the parent.
Example.
Child's return:Responsibility forReturns:Responsibility for child's returnYou made payments on your child's behalf that are deductible as a business expense and a
charitable contribution. You made the payments out of your child's earnings. These items can be deducted only on the child's return.
Standard deductionStandard Deduction
The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the larger of:
$800, or
The individual's earned income plus $250, but not more than the regular standard deduction (generally $5,000).
However, the standard deduction for a dependent who is age 65 or older or blind is higher.
Certain dependents cannot claim any standard deduction. See Standard Deduction of Zero, later.
Table 2.Standard deduction:Worksheet for dependents (Table 2)Tables and figures:Standard deduction worksheet for dependents (Table 2)Worksheets:Standard deduction worksheet for dependents (Table 2)
Use Table 2 to figure the dependent's standard deduction.
<ROM>Table 2.</ROM> Standard Deduction Worksheet for DependentsUse this worksheet only if someone can claim you (or your spouse, if filing jointly) as a dependent.If you were 65 or older and/or blind, check the correct number of boxes below. Put the total number of boxes
checked in box c and go to line 1.a.You65 or older
Blind
b.Your spouse, if claiming
spouse's exemption65 or older
Blind
c.Total boxes checked1.Enter your earned income (defined below) plus $250. If none, go on to line 3.1.2.Minimum amount.2.$8003.Compare lines 1 and 2. Enter the larger of the two amounts here.3.4.Enter on line 4 the amount shown below for your filing status.
Single or Married filing separately—$5,000
Married filing jointly or qualifying widow(er) with
dependent child—$10,000
Head of household—$7,300
4.5.Standard deduction.a.Compare lines 3 and 4. Enter the smaller amount here. If under 65 and not blind, stop here.
This is your standard deduction. Otherwise, go on to line 5b.5a.b.If 65 or older or blind, multiply $1,250 ($1,000 if married or qualifying widow(er) with dependent
child) by the number in box c above. Enter the result here.5b.c.Add lines 5a and 5b. This is your standard deduction for 2005.5c.Earned incomeincludes wages, salaries, tips, professional fees, and other compensation received
for personal services you performed. It also includes any amount received as a scholarship that you must include in income.
Example 1.
Michael is single, age 15, and not blind. His parents can claim him as a dependent on their tax return. He has taxable interest income of $800 and
wages of $150. He enters $400 (his earned income plus $250) on line 1 of Table 2. On line 3, he enters $800, the larger of $400 or $800. Michael
enters $5,000 on line 4. On line 5a, he enters $800, the smaller of $800 or $5,000. His standard deduction is $800.
Example 2.
Judy, a full-time student, is single, age 22, and not blind. Her parents can claim her as a dependent on their tax return. She has dividend income
of $275 and wages of $2,500. She enters $2,750 (her earned income plus $250) on line 1 of Table 2. On line 3, she enters $2,750, the larger of $2,750
or $800. She enters $5,000 on line 4. On line 5a, she enters $2,750 (the smaller of $2,750 or $5,000) as her standard deduction.
Example 3.
Amy, who is single, is claimed as a dependent on her parents' tax return. She is 18 and blind. She has taxable interest income of $1,000 and wages
of $2,000. She enters $2,250 (her earned income plus $250) on line 1 of Table 2. She enters $2,250 (the larger of $2,250 or $800) on line 3, $5,000 on
line 4, and $2,250 (the smaller of $2,250 or $5,000) on line 5a. Because Amy is blind, she checks the box for blindness and enters 1 in box c
at the top of Table 2. She enters $1,250 (the number in box c times $1,250) on line 5b. Her standard deduction on line 5c is $3,500 ($2,250 + $1,250).
Standard Deduction
of ZeroStandard deduction:Zero
The standard deduction for the following dependents is zero.
A married dependent filing a separate return whose spouse itemizes deductions.
A dependent who files a return for a period of less than 12 months due to a change in his or her annual accounting period.
A nonresident or dual-status alien dependent, unless the dependent is married to a U.S. citizen or resident at the end of the year and
chooses to be treated as a U.S. resident for the year. See Publication 519, U.S. Tax Guide for Aliens, for information on making this choice.
Example.
Standard deductionJennifer, who is a dependent of her parents, is entitled to file a joint return with her husband.
However, her husband elects to file a separate return and itemize his deductions. Because he itemizes, Jennifer's standard deduction on her return is
zero. She can, however, itemize any of her allowable deductions.
Dependents:Exemption forDependents:Own exemptionExemption:Own exemption — dependentDependent's
Own Exemption
A person who can be claimed as a dependent on another taxpayer's return cannot claim his or her own exemption. This is true even if the other
taxpayer does not actually claim the exemption.
Example.
James and Barbara can claim their child, Ben, as a dependent on their return. Ben is a full-time college student who works during the summer and
must file a tax return. Ben cannot claim his own exemption on his return. This is true even if James and Barbara do not claim him as a dependent on
their return.
WithholdingWithholding
From Wages
Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. If the employee claims exemption
from withholding on Form W-4, the employer will not withhold federal income tax. The exemption from withholding does not apply to social security and
Medicare taxes.
Conditions for exemption from withholding.
An employee can claim exemption from withholding for 2006 only if he or she meets both of the following conditions.
For 2005, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability.
For 2006, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability.
Dependents.
An employee who is a dependent ordinarily cannot claim exemption from withholding if both of the following are true.
The employee's total income will be more than the minimum standard deduction amount. This amount was $800 for 2005, but may be higher for
2006. Check the instructions for the 2006 Form W-4 for the correct amount.
The employee's unearned income will be more than $250.
Exceptions.
An employee who is age 65 or older or blind, or who will claim adjustments to income, itemized deductions, or tax credits on his or her 2006 tax
return, may be able to claim exemption from withholding even if the employee is a dependent. For more information, see the discussions under
Exemption From Withholding in chapter 1 of Publication 505, Tax Withholding and Estimated Tax.
Example.
Guy is 17 and a student. During the summer he works part time at a grocery store. He expects to earn about $1,000 this year. He also worked at the
store last summer and received a refund of all his withheld income tax because he did not have a tax liability. The only other income he expects
during the year is $275 interest on a savings account. He expects that his parents will be able to claim him as a dependent on their tax return. He is
not blind and will not claim adjustments to income, itemized deductions, or tax credits on his return.
Guy cannot claim exemption from withholding when he fills out Form W-4 because his parents will be able to claim him as a dependent, his total
income will be more than $800, the minimum standard deduction amount, and his unearned income will be more than $250.
Claiming exemption from withholding.
Exemption from withholdingForm W-4:Exemption from withholdingTo claim exemption from withholding, an employee must enter Exempt in the space provided
on Form W-4, line 7. The employee must complete the rest of the form, as explained in the form instructions, and give it to his or her employer.
Renewing an exemption from withholding.
An exemption from withholding is good for only one year. An employee must file a new Form W-4 by February 15 each year to continue the exemption.
Child's investment income:Tax onTax on child's investment incomePart 2. Tax on
Investment Income
of Child Under 14
Adjusted gross income
Adjustments to income
Alternative minimum tax
Capital gain distribution
Dependent
Earned income
Gross income
Investment income
Itemized deductions
Net capital gain
Net investment income
Qualified dividends
Standard deduction
Tax year
Taxable income
Unearned income
Unrecaptured section 1250 gain
28% rate gain
The two rules that follow may affect the tax on certain investment income of a child under age 14.
If the child's interest and dividend income total less than $8,000, the child's parent may be able to choose to include that income
(including capital gain distributions) on the parent's return rather than file a return for the child. (See Parent's Election To Report Child's
Interest and Dividends, later.)
If the child's interest, dividends, and other investment income total more than $1,600, part of that income may be taxed at the parent's
tax rate instead of the child's tax rate. (See Tax for Children Under Age 14 Who Have Investment Income of More Than $1,600,
later.)
For these rules, the term child includes a legally adopted child and a stepchild. These rules apply whether or not the child is a dependent.
These rules do not apply if:
The child is not required to file a tax return (see Filing Requirements in Part 1), or
Neither of the child's parents were living at the end of the tax year.
Which Parent's
Return To UseReporting child's investment income:Which parent's' returnJoint returns:Parents' return used to report child's investment incomeReporting child's investment income:Joint returns
If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the investment income of a child
under 14. The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Children
Under Age 14 Who Have Investment Income of More Than $1,600.
Parents Who Do Not File a Joint ReturnReporting child's investment income:Joint return not filed by parents
For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax.
Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends.
Parents are married.Reporting child's investment income:Married filing separatelyMarried taxpayers filing separately:Reporting child's investment income
If the child's parents file separate returns, use the return of the parent with the greater taxable income.
Parents not living together.Parents:Not living together
Parents:SeparatedSeparated parents:Reporting child's investment incomeIf the child's parents are married to each other but not living together, and the parent
with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. If the custodial parent is not
considered unmarried, use the return of the parent with the greater taxable income.
For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in
Publication 501.
If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the
custodial parent) has not remarried, use the return of the custodial parent.
If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. Therefore, if
the custodial parent and the stepparent file a joint return, use that joint return. Do not use the return of the noncustodial parent.
If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. If
the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together
applies.
Parents never married.Parents:Never marriedReporting child's investment income:Parents never married
If a child's parents did not marry each other, but lived together all year, use the return of the parent with the greater taxable income. If the
parents did not live together all year, the rules explained earlier under Parents are divorced apply.
Widowed parent remarried.Parents:RemarriedRemarried widowed parent:Reporting child's investment income
If a widow or widower remarries, the new spouse is treated as the child's other parent. The rules explained earlier under Custodial parent
remarried apply.
Election to include child's income on parent's return:Investment income
Investment incomeElection to include on parent's returnElection to include child's income on parent's returnParentsElectionElection to include child's income on parent's returnReturnsParent's election to include child's incomeElection to include child's income on parent's returnParent's Election
To Report Child's
Interest and Dividends
You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. If you do,
your child will not have to file a return.
You can make this election for 2005 only if all the following conditions are met.
Your child was under age 14 at the end of 2005. (A child born on January 1, 1992, is considered to be age 14 at the end of 2005; you cannot
make the election for this child.)
Your child is required to file a return for 2005 unless you make this election.
Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund
dividends).
The dividend and interest income was less than $8,000.
No estimated tax payment was made for 2005 and no 2004 overpayment was applied to 2005 under your child's name and social security
number.
No federal income tax was taken out of your child's income under the backup withholding rules.
You are the parent whose return must be used when applying the special tax rules for children under age 14. (See Which Parent's Return
To Use, earlier.)
These conditions are also shown in Figure 1.
How to make the election.Election to include child's income on parent's return:Making the election and its effect
Form 8814Make the election by attaching Form 8814 to your Form 1040 or Form 1040NR. (If you make this election, you cannot file
Form 1040A or Form 1040EZ.) Attach a separate Form 8814 for each child for whom you make the election. You can make the election for one or more
children and not for others.
Effect of Making
the Election
The federal income tax on your child's income may be more if you make the Form 8814 election.
Rate may be higher.
If your child received qualified dividends or capital gain distributions, you may pay up to $40 more tax if you make this election instead of
filing a separate tax return for the child. This is because the tax rate on the child's income between $800 and $1,600 is 10% if you make this
election. However, if you file a separate return for the child, the tax rate may be as low as 5% because of the preferential tax rates for qualified
dividends and capital gain distributions.
Deductions you cannot take.Deductions
By making the Form 8814 election, you cannot take any of the following deductions that the child would be entitled to on his or her return.
The higher standard deduction for a blind child.
The deduction for a penalty on an early withdrawal of your child's savings.
Itemized deductions (such as your child's investment expenses or charitable contributions).
If you use Form 8814, your child's investment income is considered your investment income. To figure the limit on your deductible investment
interest, add the child's investment income to yours. However, if your child received qualified dividends, capital gain distributions, or Alaska
Permanent Fund dividends, see chapter 3 of Publication 550, Investment Income and Expenses, for information about how to figure the limit.
Alternative minimum tax.Alternative minimum tax (AMT)
Form 6251If your child received tax-exempt interest from a private activity bond, you must determine if that interest is a tax
preference item for alternative minimum tax (AMT) purposes. If it is, you must include it with your own tax preference items when figuring your AMT.
For more information, get the instructions for Form 6251, Alternative Minimum Tax—Individuals.
Reduced deductions or credits.Credits:ReducedDeductions:Reduced
If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return, including the following.
Deduction for contributions to a traditional individual retirement arrangement (IRA).
Deduction for student loan interest.
Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses.
Total itemized deductions.
Personal exemptions.
Credit for child and dependent care expenses.
Child tax credit.
Education tax credits.
Earned income credit.
Penalty for underpayment of estimated tax.Estimated tax:Penalty for underpaymentPenalties:Estimated tax underpayment
If you make this election for 2005 and did not have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to
a penalty. If you plan to make this election for 2006, you may need to increase your federal income tax withholding or your estimated tax payments to
avoid the penalty. Get Publication 505 for more information.
Figuring Child's IncomeFiguring child's income
Form 8814Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. Only the amount
over $1,600 is added to your income. This amount is shown on Form 8814, line 6. Include this amount on Form 1040 or Form 1040NR, line 21. If you file
more than one Form 8814, include the total amounts from line 6 of all your Forms 8814 on Form 1040 or Form 1040NR, line 21. In the space next to line
21, enter Form 8814 and the total of the Form 8814, line 6 amounts.
Note.
The tax on the first $1,600 is figured on Form 8814, Part II. See Figuring Additional Tax, later.
Qualified dividends.Qualified dividends
Enter on Form 8814, line 2, any ordinary dividends your child received. This amount may include qualified dividends. Qualified dividends are those
dividends reported on Form 1040, line 9b, or Form 1040NR, line 10b, and are eligible for the lower tax rates that apply to a net capital gain. For
detailed information about qualified dividends, see Publication 550, Investment Income and Expenses.
If your child received qualified dividends, the amount of these dividends that is added to your income must be reported on Form 1040, lines 9a and
9b, or Form 1040NR, lines 10a and 10b. You do not include these dividends on Form 8814, line 6, or on line 21 of Form 1040, or Form 1040NR.
Use the Child's Qualified Dividends and Capital Gain Distributions Worksheet in the instructions for Form 8814 to figure the amount to report as
qualified dividends on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b, and the amount to report on Form 8814, line 6. (The worksheet is
needed to divide the $1,600 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest
and dividend income.)
Capital gain distributions.Capital gain distributions
Enter on Form 8814, line 3, any capital gain distributions your child received. The amount of these distributions that is added to your income must
be reported on Schedule D (Form 1040), line 13, or, if you are not required to file Schedule D, on Form 1040, line 13, or Form 1040NR, line 14. You do
not include it on Form 8814, line 6, or on line 21 of Form 1040 or Form 1040NR.
Use the Child's Qualified Dividends and Capital Gain Distributions Worksheet in the Form 8814 instructions to figure the amount to report as
capital gain distributions on Schedule D, or directly on Form 1040 or Form 1040NR, and the amount to report on Form 8814, line 6. (The worksheet is
needed to divide the $1,600 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest
and dividend income.)
Collectibles (28% rate) gain.28% rate gain
Form 1099-DIVIf any of the child's capital gain distributions are reported on Form 1099-DIV as collectibles (28% rate) gain, you
must determine how much to also include on line 4 of the 28% Rate Gain Worksheet, in the instructions for line 18, Schedule D. Multiply the child's
capital gain distribution included on Schedule D, line 13, by a fraction. The numerator is the part of the child's total capital gain distribution
that is collectibles (28% rate) gain. The denominator is the child's total capital gain distribution.
Unrecaptured section 1250 gain.Unrecaptured section 1250 gain
If any of the child's capital gain distributions are reported on Form 1099-DIV as unrecaptured section 1250 gain, you must determine how much to
include on line 11 of the Unrecaptured Section 1250 Gain Worksheet in the instructions for line 19 of Schedule D. Multiply the child's capital gain
distribution included on Schedule D, line 13, by a fraction. The numerator is the part of the child's total capital gain distribution that is
unrecaptured section 1250 gain. The denominator is the child's total capital gain distribution.
Election to include child's income on parent's return:Choosing to make election (Figure 1)FiguresTables and figuresTables and figures:Election to include child's income on parent's return (Figure 1)Figure 1. Can You Include Your Child's Income On Your Tax Return?Summary: This flow chart helps decide if you can include your child's income on your tax return.StartThis is the starting of the flowchart.Decision (1)Was your child under age 14 at the end of 2005?IF Yes Continue To Decision (2)IF No Continue To Process (b)Decision (2)Is your child required to file a tax return for 2005 if you do not make this election?IF Yes Continue To Decision (3)IF No Continue To Process (b)Decision (3)Was the child's only income interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends)?IF Yes Continue To Decision (4)IF No Continue To Process (b)Decision (4)Was the child's income less than $8,000?IF Yes Continue To Decision (5)IF No Continue To Process (b)Decision (5)Did the child make any estimated tax payments for 2005?IF Yes Continue To Process (b)IF No Continue To Decision (6)Decision (6)Did the child have an overpayment of tax on his or her 2004 return applied to the 2005 estimated tax?IF Yes Continue To Process (b)IF No Continue To Decision (7)Decision (7)Was any federal income tax withheld from the child's income (backup withholding)?IF Yes Continue To Process (b)IF No Continue To Decision (8)Decision (8)Are you the parent whose return must be used?Footnote: See Which Parent's Return To UseIF Yes Continue To Process (a)IF No Continue To Process (b)Process (a)You can include your child's income on your tax return by completing Form 8814 and attaching it to your return. If you do, your child is not
required to file a return.Continue To EndProcess (b)You cannot include your child's income on your return.Continue To EndEndThis is the ending of the flowchart.
Section 1202 gain.Section 1202 gain
If any of the child's capital gain distributions are reported as section 1202 gain (gain on qualified small business stock) on Form 1099-DIV, part
or all of that gain may be eligible for the section 1202 exclusion. (For information about the exclusion, see chapter 4 of Publication 550.) To figure
that part, multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. The numerator is the part of the child's
total capital gain distribution that is section 1202 gain. The denominator is the child's total capital gain distribution. Your section 1202 exclusion
is generally 50% of the result, but may be subject to a limit. See the instructions for Schedule D for information on how to report the exclusion
amount.
Example.
Fred is 6 years old. In 2005, he received dividend income of $1,700, which included $1,380 of ordinary dividends and a $320 capital gain
distribution from a mutual fund. (None of the distributions were reported on Form 1099-DIV as unrecaptured section 1250 gain, section 1202 gain, or
collectibles (28% rate) gain.) All of the ordinary dividends are qualified dividends. He has no other income and is not subject to backup withholding.
No estimated tax payments were made under his name and social security number.
Fred's parents elect to include Fred's income on their tax return instead of filing a return for him. They enter $1,380 on line 2 and $320 on line
3 of Form 8814.
$100 of Fred's income must be included as income on his parents' tax return ($1,700 gross income minus $1,600). They figure the amount to report on
Form 1040, lines 9a and 9b, the amount to report on their Schedule D, line 13, and the amount to report on Form 8814, line 6, as follows.
<BLD>Child's Qualified Dividends</BLD>
<L><BLD>and Capital Gain Distributions Worksheet</BLD>
<L><BLD>(Keep for your records)</BLD>1.Enter the amount of qualified dividends included on Form 8814, line 2$ 1,3802. Enter the amount from
Form 8814, line 3 3203. Enter the amount from
Form 8814, line 4 1,7004. Divide line 1 by line 3.
Enter the result as a decimal
(rounded to at least 3 places).8125.Divide line 2 by line 3. Enter
the result as a decimal
(rounded to at least 3 places).1886. Base amount $ 1,6007. Subtract line 6 from line 3 1008. Multiply line 7 by line 4.
Include this amount on Form
1040, lines 9a and 9b, or
Form 1040NR, lines 10a and
10b. On the dotted lines next
to those lines, enter Form
8814 and this amount (unless
you file Schedule B (Form
1040); in that case, follow the
instructions in the Note on
this line). Also, enter QD (for
qualified dividends) and this
amount on the dotted line next
to line 6 of Form 8814.
Note. If this amount plus the
parents' dividends is more
than $1,500, report this
amount on Schedule B
(Form 1040). Show it as
from Form 8814819.Multiply line 7 by line 5.
Include this amount on
Schedule D, line 13;
Form 1040, line 13; or
Form 1040NR, line 14.
Enter Form 8814 and
this amount on the
dotted line next to line 13 of
Schedule D, or in the
space to the left of line 13
of Form 1040 or line 14
of Form 1040NR.
Also, enter CGD (for
capital gain distribution)
and this amount on the
dotted line next to line 6 of
Form 8814.1910.Add lines 8 and 910011. Subtract line 10 from line 7.
Enter the result here and on
Form 8814, line 6 0
Capital gain distributions:WorksheetWorksheets:Capital gain distributionsOn Form 8814, Fred's parents enter $0 on line 6 and enter QD–$81 and
CGD–$19 on the dotted line next to line 6. Because the amount on line 6 is -0-, they do not include any amount from Form 8814 on line 21
of their Form 1040.
On Form 1040, they include $81 on lines 9a and 9b and enter Form 8814–$81 on the dotted line next to each of those lines. On Schedule
D, they include $19 on line 13, and enter Form 8814–$19 on the dotted line next to this line.
Figuring Additional Tax
Use Form 8814, Part II, to figure the tax on the $1,600 of your child's interest and dividends that you do not include in your income. This tax is
added to the tax figured on your income.
This additional tax is the smaller of:
10% x (your child's gross income − $800), or
$80.
Form 8814Include the amount from line 9 of all your Forms 8814 in the total on Form 1040, line 44, or Form 1040NR, line 41.
Check box a on Form 1040, line 44, or Form 1040NR, line 41.
Form 8814 Parents' Election To Report Child's Interest and Dividends 2005Summary: This is an example of Form 8814 (2005) with items included as described in the text.Illustrated Example
David and Linda Parks are married and will file separate tax returns for 2005. Their only child, Philip, is 8. Philip received a Form 1099-INT
showing $1,650 taxable interest income and a Form 1099-DIV showing $1,150 ordinary dividends. All the dividends were qualified dividends. His parents
decide to include that income on one of their returns so they will not have to file a return for Philip.
First, David and Linda each figure their taxable income (Form 1040, line 43) without regard to Philip's income. David's taxable income is $56,700
and Linda's is $74,300. Because her taxable income is greater, Linda can elect to include Philip's income on her return. (See Which Parent's
Return To Use, earlier.)
Form 8814On Form 8814 (illustrated on the next page), Linda enters her name and social security number, then Philip's name and
social security number. She enters Philip's taxable interest income, $1,650, on line 1a. Philip had no tax-exempt interest income, so she leaves line
1b blank. Linda enters Philip's ordinary dividends, $1,150, on line 2. Philip did not have any capital gain distributions, so she leaves line 3 blank.
Linda adds lines 1a and 2 and enters the result, $2,800, on line 4. Because Philip had qualified dividends, Linda must use the Child's Qualified
Dividends and Capital Gain Distributions Worksheet to figure the amount to enter on line 6, instead of subtracting line 5 from line 4. The amount she
enters on line 6 is $707, the amount from line 11 of the worksheet. On the dotted line next to line 6, she enters QD–$493, the amount
from line 8 of the worksheet. She includes that amount ($493) on lines 9a and 9b of her Form 1040. On the dotted line next to lines 9a and 9b, she
enters Form 8814–$493.
<BLD>Child's Qualified Dividends</BLD>
<L><BLD>and Capital Gain Distributions Worksheet</BLD>
<L><BLD>(Keep for your records)</BLD>1.Enter the amount of qualified dividends included on Form 8814, line 2$ 1,1502. Enter the amount from
Form 8814, line 3 03. Enter the amount from
Form 8814, line 4 2,8004. Divide line 1 by line 3. Enter the result as a decimal (rounded to at least 3 places).4115.Divide line 2 by line 3. Enter the result as a decimal (rounded to at least 3 places).0006. Base amount $ 1,6007. Subtract line 6 from line 3 1,2008. Multiply line 7 by line 4.
Include this amount on Form
1040, lines 9a and 9b, or
Form 1040NR, lines 10a and
10b. On the dotted lines next
to those lines, enter Form
8814 and this amount (unless
you file Schedule B (Form
1040); in that case, follow the
instructions in the Note on
this line). Also, enter QD (for
qualified dividends) and this
amount on the dotted line next
to line 6 of Form 8814.
Note. If this amount plus the
parents' dividends is more
than $1,500, report this
amount on Schedule B
(Form 1040). Show it as
from Form 88144939.Multiply line 7 by line 5.
Include this amount on
Schedule D, line 13;
Form 1040, line 13; or
Form 1040NR, line 14.
Enter Form 8814 and
this amount on the
dotted line next to line 13 of
Schedule D, or in the
space to the left of line 13
of Form 1040 or line 14
of Form 1040NR.
Also, enter CGD (for
capital gain distribution)
and this amount on the
dotted line next to line 6 of
Form 8814.010.Add lines 8 and 949311. Subtract line 10 from line 7.
Enter the result here and on
Form 8814, line 6 707
Capital gain distributions:WorksheetQualified dividends:WorksheetWorksheets:Capital gain distributionsWorksheets:Qualified dividends
Linda includes $707 in the total on line 21 of her Form 1040 (not illustrated) and in the space next to that line writes Form
8814–$707. Adding that amount, plus the $493 of qualified dividends, to her income increases each of the amounts on lines 22, 37, 38, 41,
and 43 of her Form 1040 by $1,200. Linda is not claiming any deductions or credits that are affected by the increase to her income. Therefore, her
revised taxable income on line 43 is $75,500 ($74,300 + $493 + $707).
Form 8814On Form 8814, Linda subtracts the $800 shown on line 7 from the $2,800 on line 4 and enters the result, $2,000, on line
8. Because that amount is not less than $800, she enters $80 on line 9. This is the tax on the first $1,600 of Philip's income, which Linda did not
have to add to her income. She must add this additional tax to the tax figured on her revised taxable income.
The tax on her $75,500 revised taxable income is $15,947. She adds $80, and enters the $16,027 total on Form 1040, line 44, and checks box a.
Election to include child's income on parent's return:Investment incomeLinda attaches Form 8814 to her Form 1040.
Tax on child's investment income:More than $1,600Tax for Children Under Age 14 Who Have Investment Income
of More Than $1,600
Part of a child's 2005 investment income may be subject to tax at the parent's tax rate if all of the following statements are true.
The child was under age 14 at the end of 2005. (A child born on January 1, 1992, is considered to be age 14 at the end of 2005; this child's
investment income is not taxed at the parent's tax rate.)
The child's investment income was more than $1,600.
The child is required to file a tax return for 2005.
These conditions are also shown in Figure 2.
If neither parent was alive on December 31, 2005, do not use Form 8615. Instead, figure the child's tax in the normal manner.
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.
The following discussions explain the parental information needed for Form 8615 and the steps to follow in figuring the child's tax.
Providing Parental Information (Form 8615, Lines A–C)Form 8615
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 a discussion of which parent's return information must be used on Form 8615.
Parent with different tax year.
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.
Example.
Kimberly must use her mother's tax and taxable income to complete her Form 8615 for calendar year 2005 (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, 2005, to complete her 2005 Form 8615.
Parent's return information not known timely.
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.
Extension of time to file.Extension of time to file
Instead of using estimates, you can get an automatic 6-month extension of time to file if, by April 17, 2006, 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.
If you have an extension, you must file the child's return by October 16, 2006, unless you ask for and are granted an additional extension.
An extension of time to file is not an extension of time to pay. You must make an accurate estimate of the tax for 2005. 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.
Parent's return information not available.
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).
How to request.
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.)
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 the child is under 14 years of age (for example, a copy of the child's birth certificate).
Evidence the child has more than $1,600 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.
Tax help
Form 2848A 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.
Form 8615:Determining whether Form 8615 is required (Figure 2)Tables and figures:Determining whether Form 8615 is required (Figure 2)Figure 2. Do You Have To Use Form 8615 To Figure Your Child's Tax?Summary: This flowchart aids in deciding whether Form 8615 is needed to figure a child's tax.StartThis is the starting of the flowchart.Decision (1)Was the child under age 14 at the end of 2005?IF Yes Continue To Decision (2)IF No Continue To Process (a)Decision (2)Is the child required to file a tax return for 2005?IF Yes Continue To Decision (3)IF No Continue To Process (a)Decision (3)Was the child's investment income more than $1,600?IF Yes Continue To Process (b)IF No Continue To Process (a)Process (a)Do not use Form 8615 to figure the child's tax.Continue To EndProcess (b)Use Form 8615 to figure the child's tax. Attach it to the child's return.Note: If the child's parent (see Footnote) chooses to report the child's income by filing Form 8814, the child is not required to file a tax
return. Do not use Form 8615 (See Parent's Election To Report Child's Interest and Dividends.)Footnote: See Which Parent's Return To UseContinue to EndEndThis is the ending of the flowchart.Step 1. Figuring the Child's
Net Investment Income
(Form 8615, Part I)
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.
Line 1 (Investment Income)
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.
However, use the following worksheet if the child has excluded any foreign earned income or deducted a loss from self-employment or a net operating
loss from another year.
Alternate Worksheetfor Form 8615, Line 1A.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
Form 8615:Alternate worksheet forWorksheets:Form 8615 alternate worksheetForm 8615:Illustrated Part I ofIllustrated Part I of Form 8615Summary: This is an example of the worksheet and portion of Form 8615 (2005) with items included as described in the
text.Investment income defined.Investment income:Defined
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).
Nontaxable income.
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.
Capital loss.Capital losses
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.
Income from property received as a gift.
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.
Example.
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.
Trust income.Trust income
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.
Adjustment to income.Adjustments to income
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.
Line 2 (Deductions)
If the child does not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter $1,600 on line 2.
If the child does itemize deductions, enter on line 2 the larger of:
$800 plus the child's itemized deductions that are directly connected with the production of the investment income entered on line 1,
or
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.
Form 1040:Schedule AThese 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.
Example 1.
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 $1,600 because that is more than the sum of $800 and his directly-connected itemized
deductions of $300.
Example 2.
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 $1,850. This is the larger of:
$800 plus the $1,050 of directly connected itemized deductions, or
$1,600.
Line 3
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.
Line 4 (Child's Taxable Income)
Enter on line 4 the child's taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 40.
Line 5 (Net Investment Income)Net investment income
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.
Form 8615:Illustrated Part II ofIllustrated Part II of Form 8615Summary: This is an example of a portion of Part II of Form 8615 (2005) with items included as described in the
text.
Step 2. Figuring a Tentative
Tax at the Parent's Tax
Rate (Form 8615, Part II)Form 8615:Figuring parent's tentative tax
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.
Line 6 (Parent's Taxable Income)
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.
Line 7 (Net Investment Income of Other Children)
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.
Example.
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).
Other children's information not available.
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).
Line 8 (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.
Net capital gain.Net capital gain
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.
Qualified dividends.Qualified dividends
Qualified dividends are those dividends reported on line 9b of Form 1040 or Form 1040A, or line 10b of Form 1040NR.
Net capital gain and qualified dividends on line 8.
If neither the child nor the parent nor any other child has net capital gain, the net capital gain on line 8 is zero.
If neither the child, nor the 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.
Line 9 (Tax on Parent's Taxable Income Plus Children's Net Investment Income)
Worksheets:Qualified dividends and capital gain taxFigure 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 another 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.
Using the Schedule D Tax Worksheet for line 9 tax.Form 1040:Schedule D
Form 4952Use 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.
On line 1, enter the amount from Form 8615, line 8.
On line 2, enter the qualified dividends included on Form 8615, line 8. (See the earlier discussion for line 8.)
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.
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.
On lines 5 and 6, follow the worksheet instructions.
On line 7, enter the net capital gain included on Form 8615, line 8. (See the earlier discussion for line 8.)
On lines 8 through 10, follow the worksheet instructions.
On line 11, enter zero if neither the child, parent, nor any other child has unrecaptured section 1250 gain (line 19 of Schedule D) or 28%
rate gain (line 18 of Schedule D). 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).
Complete lines 12 through 37, following the worksheet instructions. Use the parent's filing status to complete lines 15, 34, and 36.
Enter the amount from line 37 of this Schedule D Tax Worksheet on Form 8615, line 9, and check the box on that line.
Figuring 28% rate gain (line 11).28% rate gain
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.
Schedule D Tax WorksheetWorksheets:Schedule D TaxFiguring unrecaptured section 1250 gain (line 11).Unrecaptured section 1250 gain
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 83. Enter the amount from line 2 of the child's completed Line 5 Worksheet4. Divide line 2 by line 3. Enter
the result as a decimal5. 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 children7. Enter the amount, if any, from line 19 of the parent's Schedule D8.Add lines 5, 6, and 7. Also include this amount on the Schedule D Tax Worksheet, line 11.
Unrecaptured section 1250 gain:WorksheetWorksheets:Unrecaptured section 1250 gainUsing Schedule J for line 9 tax.Form 1040:Schedule J
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.
On line 1, enter the amount from Form 8615, line 8.
On line 2, enter the amount from the parent's Schedule J, line 2.
Complete line 3 following the Schedule J instructions.
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).
On lines 5 through 16, enter the amounts from the parent's Schedule J, lines 5 through 16.
Complete line 17 following the Schedule J instructions.
On lines 18 through 21, enter the amounts from the parent's Schedule J, lines 18 through 21.
Complete line 22 following the Schedule J instructions.
Enter the amount from line 22 of this worksheet Schedule J on Form 8615, line 9, and check the box on that line.
Line 10 (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 10;
Form 1040NR, line 41; or Form 1040NR-EZ, line 15. Do not include the tax, if any, from Form 4972 or Form 8814.
Line 11 (Tentative Tax)
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.
Lines 12a and 12b (Dividing the Tentative Tax)
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.
Example.
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
Lines 12a and 12b: Dividing the Tentative TaxSummary: This is a computation illustrated in the text: $800 divided by $2,400 equals .333.Line 13 (Child's Share of Tentative Tax)
Form 8615:Figuring parent's tentative taxIf 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.
Step 3. Figuring the
Child's Tax
Form 8615:Figuring child's taxInvestment income:Figuring child's taxThe final step in figuring a child's tax using Form 8615 is to determine the larger of:
The total of:
The child's share of the tentative tax based on the parent's tax rate, plus
The tax on the child's taxable income in excess of net investment income, figured at the child's tax rate, or
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.
Line 14 (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 does not exceed 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.
Net capital gain and qualified dividends on line 14.
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.)
Line 15 (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.)
Using the Schedule D Tax Worksheet for line 15 tax.Form 1040:Schedule D
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.
On line 1, enter the amount from Form 8615, line 14.
On line 2, enter the qualified dividends included on Form 8615, line 14. (See the earlier discussion for line 14.)
Leave lines 3 through 5 blank.
Enter the amount from line 2 on line 6.
On line 7, enter the net capital gain included on Form 8615, line 14. (See the earlier discussion for line 14.)
Skip line 8.
Enter the amount from line 7 on line 9.
Complete line 10, following the worksheet instructions.
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.
Complete lines 12 through 37, following the worksheet instructions. Use the child's filing status to complete lines 15, 34, and
36.
Enter the amount from line 37 of this Schedule D Tax Worksheet on Form 8615, line 15, and check the box on that line.
Using Schedule J for line 15 tax.Form 1040:Schedule J
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 2 through 22 following the Schedule J instructions. Use the child's filing status to complete lines 4, 8, 12, and
16.
Enter the amount from line 22 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.
Line 16 (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.
Line 17 (Tax at Child's Rate)
Figure the tax on line 4 (the child's taxable income). 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.
Line 18 (Tax)
Form 8615:Figuring child's taxInvestment income:Figuring child's taxForm 8615Enter 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.
Alternative Minimum TaxAlternative minimum tax (AMT)
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, get Form 6251.
Limit on exemption amount.Limit on exemption amount
Form 6251Ordinarily, single people can subtract a $40,250 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 2005 is limited to the child's earned income plus $5,850. Figure the
child's allowable exemption amount on the worksheet in the instructions for Form 6251, line 29.
Illustrated Example
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 14 and has more than $1,600 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 $1,600 on line 2. He enters $1,200 ($2,800
− $1,600) on line 3.
Sara's taxable income, as shown on her Form 1040A, line 27, is $2,550. This is her total income ($4,350) minus her standard deduction ($1,800). Her
standard deduction is limited to the amount of her earned income plus $250. John enters $2,550 on line 4.
John compares lines 3 and 4 and enters the smaller amount, $1,200, 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 ($1,200), line 6 ($48,000), and line 7 (blank) and enters $49,200 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 $300 net capital gain and $450 qualified dividends are included on line 5. He completes that worksheet as follows.
Line 5 Worksheet #11.Enter the child's qualified dividends$1,0502. Enter the child's net capital gain 7003. Enter the amount from the child's Form 8615, line 12,8004. Divide line 1 by line 3. Enter the result as a decimal (rounded to at least 3 places). Do not enter more
than 1.000.3755.Divide line 2 by line 3. Enter the result as a decimal (rounded to at least 3 places). Do not enter more than 1.000.2506. Multiply $1,600 by line 4 6007.Multiply $1,600 by line 5 4008.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) 4509. 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) 300
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 $300, and the amount of qualified dividends on that line is
$450. 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 $450 on line 2 of the Qualified Dividends and Capital Gain Tax Worksheet, and $300 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 $6,579 on Sara's Form 8615, line
9.
He enters the tax from his and Laura's Form 1040 ($6,474) on Sara's Form 8615, line 10, then subtracts that amount from the $6,579 on line 9, and
enters the $105 remainder on line 11. Because line 7 is blank, John skips lines 12a and 12b and enters $105 on line 13.
John subtracts line 5 ($1,200) from line 4 ($2,550) and enters the result, $1,350 on line 14. Using the instructions for line 14 earlier, John
subtracts the net capital gain included on line 5 ($300) from Sara's net capital gain ($700) to figure the $400 net capital gain included on line 14.
He also subtracts the qualified dividends included on line 5 ($450) from Sara's qualified dividends ($1,050) to figure the $600 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 $86 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, $191, on line 16. Then he uses another Qualified Dividends and Capital Gain Tax
Worksheet to figure the $169 tax on Sara's $2,550 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, $191, on line 18 of Sara's Form 8615. He also enters that amount on Sara's
Form 1040A, line 28.
John also completes Schedule 1, Form 1040A (not shown) for Sara.
Form 1040A:Filled in exampleForm 1040A United States Individual Income Tax Return 2005Summary: This is an example of Form 1040A (2005) with these line items completed as would pertain to the text.Under
Label:Your first name and initial field contains Sara LLast name field contains BrownYour social security number field contains 111-00-1111Home address (number and street). If you have a Post Office box, see page 18. field contains 1040A Main StreetCity, town or post office, state, and ZIP code. If you have a foreign address, see page 18. field contains Hometown Arizona
85240Presidential Election Campaign Do you, or your spouse if filing a joint return, want $3 to go to this fund? You: Yes Note. Checking Yes will not change your tax or reduce
your refund. Do you, or your spouse if filing a joint return, want $3 to go to this fund? You: Yes checkbox
checkedUnder
Filing Status:1. Single checkbox checkedUnder
Exemptions:6d. Total number of exemptions claimed. Add numbers on line above field contains 0Under
Income:7. Wages, salaries, tips, etc. Attach Form(s) W-2. field contains 1,5508a. Taxable interest. Attach Schedule 1 if required. field contains 1,0509. Ordinary dividends. Attach Schedule 1 if required. field contains 1,05010. Capital gain distributions (see page 27). field contains 70015. Add lines 7 through 14b (far right column). This is your total income field contains 4,350Under
Adjusted gross income:21. Subtract line 20 from line 15. This is your adjusted gross income. field contains
4,350Form 1040A (2005), Page 2Summary: This is an example of Form 1040A (2005), page 2 with items included as described in the text. Additionally, these line items are also
completed:Under
Tax, credits, and payments:24. Enter your standard deduction (see left margin). field contains 1,80025. Subtract line 24 from line 22. If line 24 is more than line 22, enter 0. field contains 2,55036. Subtract line 35 from line 28. If line 35 is more than line 28, enter 0. field contains 22338. Add lines 36 and 37. This is your total tax. field contains 22339. Federal income tax withheld from Forms W-2 and 1099. field contains 15540. 2005 estimated tax payments and amount applied from 2004 return. field contains 30043. Add lines 39 through 42. These are your total payments. field contains 455Under
Refund:44. If line 43 is more than line 38, subtract line 38 from line 43. This is the amount you overpaid. field contains 23245a. Amount of line 44 you want refunded to you. field contains 232Under
Sign here:Your signature field contains Sara L. BrownDate field contains 2-15-05Your occupation field contains StudentDaytime phone number field contains (800) 829-1040Form 8615:Filled in exampleForm 8615 Tax for Children Under Age 14 With Investment Income of More Than $1,600 2005Summary: This is an example of Form 8615 (2005) with items included as described in the text. Additionally, these line items are
completed:Child's name shown on return field contains Sara L. BrownChild's social security number field contains 111-00-1111Under
Part III: Child's Tax:16. Add lines 13 and 15 field contains 19117. Enter the tax on the amount on line 4 based on the child's filing status (see instructions) field contains 169.
If the Capital Gain Tax Worksheet or Schedule D or J (Form 1040) is used to figure the tax, check here checkbox
checked.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 271.49,200*2.Enter the amount from Form 1040A, line 9b2.450*3.Enter the amount from Form 1040A, line 103.300*4.Add lines 2 and 34. 7505.Subtract line 4 from line 1. If zero or less, enter -0-5.48,4506.Enter the smaller of:• The amount on line 1, or• $29,700 if single or married filing separately, $59,400 if married filing jointly or qualifying widow(er), or6.49,200* $39,800 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 through 9; go to line 10 and check the No box.No.Enter the amount from line 57.48,4508.Subtract line 7 from line 68. 7509.Multiply line 8 by 5% (.05)9. 3810.Are the amount on lines 4 and 8 the same?Yes.Skip lines 10 through 13; go to line 14.No.Enter the smaller of line 1 or line 410.11.Enter the amount from line 8 (if line 8 is blank, enter -0-)11.12.Subtract line 11 from line 1012.13.Multiply line 12 by 15% (.15)13.14.Figure the tax on the amount on line 5. Use the Tax Table. Enter tax here14.6,54115.Add lines 9, 13, and 1415.6,57916.Figure the tax on the amount on line 1. Use the Tax Table. Enter tax here16.6,65417.Tax on all taxable income. Enter the smaller of line 15 or line 16 here and on Form
1040A, line 2817.6,579
Worksheets:Qualified dividends and capital gain tax:Filled in example
* See the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 9
tax in the Form 8615 instructions.
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 271.1,350*2.Enter the amount from Form 1040A, line 9b2.600*3.Enter the amount from Form 1040A, line 103.400*4.Add lines 2 and 34.1,0005.Subtract line 4 from line 1. If zero or less, enter -0-5. 3506.Enter the smaller of:• The amount on line 1, or• $29,700 if single or married filing separately, $59,400 if married filing jointly or qualifying widow(er), or6.1,350* $39,800 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 through 9; go to line 10 and check the No box.No.Enter the amount from line 57. 3508.Subtract line 7 from line 68.1,0009.Multiply line 8 by 5% (.05)9.5010.Are the amount on lines 4 and 8 the same?Yes.Skip lines 10 through 13; go to line 14.No.Enter the smaller of line 1 or line 410.11.Enter the amount from line 8 (if line 8 is blank, enter -0-)11.12.Subtract line 11 from line 1012.13.Multiply line 12 by 15% (.15)13.14.Figure the tax on the amount on line 5. Use the Tax Table. Enter tax here14.36*15.Add lines 9, 13, and 1415.8616.Figure the tax on the amount on line 1. Use the Tax Table. Enter tax here16.136*17.Tax on all taxable income. Enter the smaller of line 15 or line 16 here and on Form
1040A, line 2817.86
Worksheets:Qualified dividends and capital gain tax:Filled in example
* See the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 15
tax in the Form 8615 instructions.
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 271.2,5502.Enter the amount from Form 1040A, line 9b2.1,0503.Enter the amount from Form 1040A, line 103.7004.Add lines 2 and 34.1,7505.Subtract line 4 from line 1. If zero or less, enter -0-5.8006.Enter the smaller of:• The amount on line 1, or• $29,700 if single or married filing separately, $59,400 if married filing jointly or qualifying widow(er), or6.2,550* $39,800 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 through 9; go to line 10 and check the No box.No.Enter the amount from line 57.8008.Subtract line 7 from line 68.1,7509.Multiply line 8 by 5% (.05)9.8810.Are the amount on lines 4 and 8 the same?Yes.Skip lines 10 through 13; go to line 14.No.Enter the smaller of line 1 or line 410.11.Enter the amount from line 8 (if line 8 is blank, enter -0-)11.12.Subtract line 11 from line 1012.13.Multiply line 12 by 15% (.15)13.14.Figure the tax on the amount on line 5. Use the Tax Table. Enter tax here14.8115.Add lines 9, 13, and 1415.16916.Figure the tax on the amount on line 1. Use the Tax Table. Enter tax here16.25617.Tax on all taxable income. Enter the smaller of line 15 or line 16 here and on Form
1040A, line 2817.169
Worksheets:Qualified dividends and capital gain tax:Filled in example
Child's investment income:Tax onTax on child's investment income:More than $1,600Adjusted gross income.Adjusted gross income (AGI):Defined
Gross income (defined later) minus adjustments to income (defined next).
Adjustments to income.Adjustments to income:Defined
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.Alternative minimum tax (AMT):Defined
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.Capital gain distributions:Defined
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.Dependents:Defined
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.Earned income:Defined
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.
Exemption.Exemption:Defined
An amount ($3,200 for 2005) 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.
Gross income.Gross income:Defined
All income from all sources (other than tax-exempt income) that must be included on your tax return.
Investment income.Investment income:Defined
See Unearned income, later, and Investment income defined, earlier, under Step 1. Figuring the Child's Net Investment
Income (Form 8615, Part I).
Itemized deductions.Itemized deductions:Defined
Deductions allowed on Schedule A (Form 1040) for medical and dental expenses, taxes, 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.Net capital gain:Defined
The excess of net long-term capital gain over any net short-term capital loss. For 2005, 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,
or Form 1040A, line 10.
Net investment income.Net investment income:Defined
The total of all investment income (other than tax-exempt income) reduced by the sum of the following: adjustments to income related to the
investment income, plus the larger of:
$800 plus itemized deductions directly connected with producing the investment income, or
$1,600.
Qualified dividends.Qualified dividends:Defined
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. For more information, see Publication 550.
Qualifying child.Qualifying childChild, qualifying
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, and
Was under age 19 at the end of the year (or was under age 24 at the end of the year and a student, or was any age and permanently and
totally disabled).
For details, see Exemptions for Dependents in Publication 501.
Qualifying relative.Qualifying relativeRelative, qualifying
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 $3,200 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.Standard deduction:Defined
An amount (based on filing status, age, and blindness) that can be subtracted from adjusted gross income in figuring taxable income. The standard
deduction is not used if itemized deductions are claimed.
Tax year.Tax year:Defined
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.Taxable income:Defined
Gross income minus any adjustments to income, any allowable exemptions, and either itemized deductions or the standard deduction.
Unearned income.Unearned income:Defined
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.
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.28% rate gain:Defined
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).
Tax on child's investment incomeHow To Get Tax HelpMore informationTax helpFree tax servicesTax helpHelpTax helpAssistanceTax helpPublicationsTax helpTTY/TDD information
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.
Contacting your Taxpayer Advocate.Taxpayer Advocate
If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate.
The Taxpayer Advocate independently represents your interests and concerns within the IRS by protecting your rights and resolving problems that
have not been fixed through normal channels. While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up
problems that resulted from previous contacts and ensure that your case is given a complete and impartial review.
To contact your Taxpayer Advocate:
Call the Taxpayer Advocate toll free at
1-877-777-4778.
Call, write, or fax the Taxpayer Advocate office in your area.
For more information, see Publication 1546, How To Get Help With Unresolved Tax Problems (now available in Chinese, Korean, Russian, and
Vietnamese, in addition to English and Spanish).
Free tax services.
To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. It contains a list of free tax publications and an
index of tax topics. It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax
topics.
Internet. You can access the IRS website 24 hours a day, 7 days a week, at
www.irs.gov 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 2005 refund. Click on Where's My Refund. Be sure to wait at least 6 weeks from the date you filed your
return (3 weeks if you filed electronically). Have your 2005 tax return available because you will need to know 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.
View Internal Revenue Bulletins (IRBs) published in the last few years.
Figure your withholding allowances using our Form W-4 calculator.
Sign up to receive local and national tax news by email.
Get information on starting and operating a small business.
Phone. Many services are available by phone.
Ordering forms, instructions, and publications. Call 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 and press 2 to listen to pre-recorded messages covering various tax topics.
Refund information. If you would like to check the status of your 2005 refund, call 1-800-829-4477 and press 1 for automated
refund information or call 1-800-829-1954. Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically).
Have your 2005 tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount
of your refund.
Evaluating the quality of our telephone services. To ensure that 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 sometimes listen in on or
record telephone calls. Another is to ask some callers to complete a short survey at the end of the call.
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-ROM 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're 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,
but 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. To find the number, go to
www.irs.gov/localcontacts or
look in the phone book under United States Government, Internal Revenue Service.
Mail. You can send your order for forms, instructions, and publications to the address below and receive a response within 10 business
days after your request is received.
National Distribution Center
P.O. Box 8903
Bloomington, IL 61702-8903
CD-ROM for tax products. You can order Publication 1796, IRS Tax Products CD-ROM, and obtain:
A CD that is released twice so you have the latest products. The first release ships in late December and the final release ships in late
February.
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 (FAQs).
Tax Topics from the IRS telephone response system.
Fill-in, print, and save features for most tax forms.
Internal Revenue Bulletins.
Toll-free and email technical support.
Buy the CD-ROM from National Technical Information Service (NTIS) at
www.irs.gov/cdorders for $25 (no handling fee) or call 1-877-233-6767 toll free to buy the CD-ROM for $25 (plus a $5 handling fee).
CD-ROM for small businesses. Publication 3207, The Small Business Resource Guide CD-ROM for 2005, has a new look and enhanced navigation
features. This year's CD includes:
Helpful information, such as how to prepare a business plan, find financing for your business, and much more.
All the business tax forms, instructions, and publications needed to successfully manage a business.
Tax law changes for 2005.
IRS Tax Map to help you find forms, instructions, and publications by searching on a keyword or topic.
Web links to various government agencies, business associations, and IRS organizations.
Rate the Product survey—your opportunity to suggest changes for future editions.
An updated version of this CD is available each year in early April. You can get a free copy by calling 1-800-829-3676 or by visiting
www.irs.gov/smallbiz.
Tax Publications for Individual Taxpayers and Commonly Used Tax FormsSummary: This is a listing of tax publications and commonly used tax forms. The text states:Tax Publications for Individual TaxpayersSee How to Get Tax Help for a variety of ways to get publications, including by computer, phone, and mail.General Guides1--Your Rights as a Taxpayer17--Your Federal Income Tax (For Individuals)334--Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ)509--Tax Calendars for 2006553--Highlights of 2005 Tax Changes910--Guide to Free Tax ServicesSpecialized Publications3--Armed Forces' Tax Guide54--Tax Guide for United States Citizens and Residents Aliens Abroad225--Farmer's Tax Guide463--Travel, Entertainment, Gift, and Car Expenses501--Exemptions, Standard Deduction, and Filing Information502--Medical and Dental Expenses503--Child and Dependent Care Expenses504--Divorced or Separated Individuals505--Tax Withholding and Estimated Tax508--Tax Benefits for Work-Related Education514--Foreign Tax Credit for Individuals516--United States Government Civilian Employees Stationed Abroad517--Social Security and Other Information for Members of the Clergy and Religious Workers519--United States Tax Guide for Aliens520--Scholarships and Fellowships521--Moving Expenses523--Selling Your Home524--Credit for the Elderly or the Disabled525--Taxable and Nontaxable Income526--Charitable Contributions527--Residential Rental Property529--Miscellaneous Deductions530--Tax Information for First-Time Homeowners531--Reporting Tip Income534--Depreciating Property Placed in Service Before 1987536--Net Operating Losses for Individuals, Estates, and Trusts537--Installment Sales541--Partnerships544--Sales and Other Dispositions of Assets547--Casualties, Disasters, and Thefts550--Investment Income and Expenses551--Basis of Assets552--Recordkeeping for Individuals554--Older Americans' Tax Guide555--Community Property556--Examination of Returns, Appeal Rights, and Claims for Refund559--Survivors, Executors, and Administrators561--Determining the Value of Donated Property564--Mutual Fund Distributions570--Tax Guide for Individuals With Income From United States Possessions571--Tax-Sheltered Annuity Plans (403(b) Plans)575--Pension and Annuity Income584--Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property)587--Business Use of Your Home (Including Use by Day-Care Providers)590--Individual Retirement Arrangements593--Tax Highlights for United States Citizens and Residents Going Abroad594--The Internal Revenue Service Collection Process596--Earned Income Credit721--Tax Guide to United States Civil Service Retirement Benefits901--United States Tax Treaties907--Tax Highlights for Persons with Disabilities908--Bankruptcy Tax Guide915--Social Security and Equivalent Railroad Retirement Benefits919--How Do I Adjust My Tax Withholding?925--Passive Activity and At-Risk Rules926--Household Employer's Tax Guide929--Tax Rules for Children and Dependents936--Home Mortgage Interest Deduction946--How to Depreciate Property947--Practice Before the Internal Revenue Service and Power of Attorney950--Introduction to Estate and Gift Taxes967--Internal Revenue Service Will Figure Your Tax969--Medical Savings Accounts970--Tax Benefits for Education971--Innocent Spouse Relief972--Child Tax Credit (For Individuals Sent Here From the Form 1040 or 1040A Instructions)1542--Per Diem Rates1544--Reporting Cash Payments of Over $10,0001546--The Taxpayer Advocate Service of the Internal Revenue ServiceSpanish Language Publications1SP--Derechos del Contribuyente579SP Cómo Preparar la Declaración de Impuesto Federal594SP Qué es lo que Debemos Saber sobre el Proceso de Cobro del IRS596SP Crédito por Ingreso del Trabajo850 English-Spanish Glossary of Words and Phrases Used in Publications Issued by the Internal Revenue Service1544SP Informe de Pagos en Efectivo en Exceso de $10,000 (Recibidos en una Ocupación o Negocio)Commonly Used Tax FormsSee How To Get Tax Help for a variety of ways to get forms, including by computer, phone, and mail.
Form Number and Title
1040--United States Individual Income Tax Return
Schedule A&B--Itemized Deductions & Interest and Ordinary Dividends
Schedule C--Profit or Loss From Business
Schedule C-EZ--Net Profit From Business
Schedule D--Capital Gains and Losses
Schedule D-1--Continuation Sheet for Schedule D
Schedule E--Supplemental Income and Loss
Schedule EIC--Earned Income Credit
Schedule F--Profit or Loss From Farming
Schedule H--Household Employment Taxes
Schedule J--Income Averaging For Farmers and Fishermen
Schedule R--Credit for the Elderly or the Disabled
Schedule SE--Self-Employment Tax
1040A--United States Individual Income Tax Return
Schedule 1--Interest and Ordinary Dividends for Form 1040A Filers
Schedule 2--Child and Dependent Care Expenses for Form 1040A Filers
Schedule 3--Credit for the Elderly or the Disabled for Form 1040A Filers
1040EZ--Income Tax Return for Single and Joint Filers With No Dependents
1040-ES--Estimated Tax for Individuals
1040X--Amended United States Individual Income Tax Return
2106--Employee Business Expenses
2106-EZ--Unreimbursed Employee Business Expenses
2210--Underpayment of Estimated Tax by Individuals, Estates, and Trusts
2441--Child and Dependent Care Expenses
2848--Power of Attorney and Declaration of Representative
3903--Moving Expenses
4562--Depreciation and Amortization
4868--Application for Automatic Extension of Time To File United States Individual Income Tax Return
4952--Investment Interest Expense Deduction
5329--Additional Taxes on Qualified Plans (including Individual Retirement Arrangements) and Other Tax-Favored Accounts
