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Instructions for Form 8615 2006 Tax Year

General Instructions

This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

What's New

  • This form generally must be filed for a child under age 18 (previously under age 14) at the end of the year who had investment income of more than $1,700 (previously $1,600).

  • For purposes of completing this form, a taxable distribution from a qualified disability trust is considered earned income, not investment income. See page 2.

  • New rules apply if the child or the parent files Form 2555 or 2555-EZ to claim the foreign earned income exclusion or housing exclusion. See the instructions for lines 4, 6, 10, and 18.

Purpose of Form

For children under age 18, investment income over $1,700 is taxed at the parent's rate if the parent's rate is higher than the child's. If the child's investment income is more than $1,700, use Form 8615 to figure the child's tax.

Investment Income

For Form 8615, “investment income” includes all taxable income other than earned income as defined on page 2. Investment income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, etc. It also includes taxable social security benefits, pension and annuity income, and income (other than earned income) received as the beneficiary of a trust.

Who Must File

Form 8615 must be filed for any child who meets the following conditions.

  • The child was under age 18 at the end of 2006. A child born on January 1, 1989, is considered to be age 18 at the end of 2006.

  • At least one of the child's parents was alive at the end of 2006.

  • The child had more than $1,700 of investment income.

  • The child is required to file a tax return.

  • The child does not file a joint return for 2006.

Tip
The parent may be able to elect to report the child's interest, ordinary dividends, and capital gain distributions on the parent's return. If the parent makes this election, the child will not have to file a return or Form 8615. However, the federal income tax on the child's income, including qualified dividends and capital gain distributions, may be higher if this election is made. For more details, see Form 8814, Parents' Election To Report Child's Interest and Dividends.

Additional Information

For more details, see Pub. 929, Tax Rules for Children and Dependents.

Incomplete Information for Parent or Other Children

If the parent's taxable income or filing status or the net investment income of the parent's other children is not known by the due date of the child's return, reasonable estimates can be used. Enter “Estimated” next to the appropriate line(s) of Form 8615. When the correct information is available, file Form 1040X, Amended U.S. Individual Income Tax Return.

Instead of using estimates, the child may be able to get an automatic 6-month extension of time to file. For details, see Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.

Amended Return

If after the child's return is filed, the parent's taxable income changes or the net investment income of any of the parent's other children changes, the child's tax must be refigured using the adjusted amounts. If the child's tax changes, file Form 1040X to correct the child's tax.

Alternative Minimum Tax

A child whose tax is figured on Form 8615 may owe the alternative minimum tax. For details, see Form 6251, Alternative Minimum Tax—Individuals, and its instructions.

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