All About IRS Form 8615: Taxation for Children with Unearned Income
Filing taxes can be a complicated and confusing process, especially when it comes to certain forms.
One of the forms that may be required for families with minor children is Form 8615, also known as "Tax for Certain Children Who Have Unearned Income." This form is used to report and calculate the tax liability of minors who have investment income exceeding certain thresholds set by the IRS.
The purpose of this form is to ensure that minors do not use their lower tax brackets to reduce their tax liability on unearned income from investments.
What is Form 8615?
Form 8615 is used to report unearned income, such as interest, dividends, and capital gains, from investments by minors. The form is required when the child's unearned income exceeds certain limits set by the IRS. It calculates the child's tax liability, which may be different from the tax liability of the parent or guardian.
It is important to understand the purpose of this form and when it is required in order to properly report and calculate the child's tax liability.
Who is Required to File Form 8615 and When?
Form 8615 must be filed by the parents or guardians of minors who have unearned income exceeding the following thresholds:
- $1,100 for tax year 2022 if the child is under the age of 18 at the end of the tax year.
- $2,200 for tax year 2022 if the child is age 18 at the end of the tax year and earned income from work does not exceed half of their support.
- $12,750 for tax year 2022 if the child is over the age of 18 at the end of the tax year.
NOTE! These thresholds are subject to change each tax year and may be adjusted for inflation. The parents or guardians must file Form 8615 with their tax return if the child's unearned income exceeds these limits. The child's income may also be subject to the "Kiddie Tax," which is a tax on the unearned income of children.
In addition to these thresholds, it is important to consider any other factors that may affect the child's tax liability, such as investment expenses and capital losses.
NB! For 2023 tax filing, Form 8615 must be submitted if the following criteria apply:
- the child has unearned income exceeding the threshold ($1,100, $2,300 or $12,7500);
- the child cannot file a shared tax return with a spouse;
- at least one parent of the child is still alive.
What Info is Included on the Form 8615?
Form 8615 includes information about the child's investment income, as well as any related expenses and losses. The following information is required to be included on the form:
- The child's name, address, and social security number.
- The parents' or guardians' name, address, and tax identification number.
- A detailed list of the child's investment income, including the source and amount of each item of income.
- Any expenses related to the child's investments, such as investment management fees.
- Any capital losses sustained by the child.
It is important to accurately and thoroughly complete Form 8615 in order to properly calculate the child's tax liability.
How to File Form 8615 - Instructions
Form 8615 is a crucial form that must be filed along with the parent's or guardian's tax return. The following steps provide a more detailed overview of how to file the form:
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Gather all required information, including the child's investment income, expenses, and losses. This information should be gathered from all sources of investment income, including stocks, bonds, and mutual funds.
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Complete Form 8615, including all required information. Ensure that all information provided is accurate and complete, as any errors or missing information may result in a delay in processing the tax return or a correction notice from the IRS.
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Attach Form 8615 to the parent's or guardian's tax return. It is important to ensure that the form is securely attached and will not become separated during the submission process.
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Submit the tax return, including Form 8615, to the IRS. The tax return and Form 8615 can be submitted electronically or by mail. It is recommended to retain a copy of the tax return and Form 8615 for your records.
If you have questions or concerns about filing Form 8615, a tax pro can provide guidance on completing the form accurately and ensure that all required information is included.
NOTE! They can also assist with determining the child's tax liability and determining the best course of action for the child's investments.
Unsure of every detail with your 8615?
Get your free tax consultation with a pro.
To Sum Up
IRS Form 8615 is a crucial form for parents or guardians of minors who have investment income exceeding certain thresholds set by the IRS. The form is used to report and calculate the child's tax liability, which may be different from the tax liability of the parent or guardian.
It is important to understand the requirements and thresholds for filing Form 8615, as well as the information required to be included on the form.
FAQ
1. Does the parent file Form 8615?
Yes, the parent or guardian is responsible for filing Form 8615 along with their tax return. The form reports the child's investment income and calculates the child's tax liability.
2. What is Form 8814 vs Form 8615?
Form 8814 is used by parents to report their child's investment income if the child is under the age of 14 and the child's investment income exceeds a certain threshold. Form 8615 is used to report the child's investment income if the child is between the ages of 14 and 17 and the child's investment income exceeds a certain threshold.
3. Who is supposed to pay the kiddie tax, the parent or the child?
Well, technically it's the child who's responsible for paying the kiddie tax on their investment income. But don't worry, it's the parent or guardian's job to report the child's investment income and figure out how much tax they owe using Form 8615.
4. Who qualifies for the kiddie tax?
The kiddie tax can affect kids aged 14 to 17 who make more than a certain amount of investment income, as set by the IRS. The child also has to be claimed as a dependent on their parent's tax return.