In your original post, you state that "TT is asking me to complete form 8615 which I do not understand since the form says only use if the child has more than $2300 in INVESTMENT income."
That's not correct. According to Who Must File in the Instructions for Form 8615:
Form 8615 must be filed for any child who meets all of the following conditions.
- The child had more than $2,300 of unearned income.
- The child is required to file a tax return.
- The child either:
- Was under age 18 at the end of 2022,
- Was age 18 at the end of 2022 and didn’t have earned income that was more than half of the child's support, or
- Was a full-time student at least age 19 and under age 24 at the end of 2022 and didn’t have earned income that was more than half of the child's support.
(Earned income is defined later. Support is defined below.)
- At least one of the child's parents was alive at the end of 2022.
- The child doesn’t file a joint return for 2022.
[Bolding mine.]
You indicate that the PFD was $3,284 for each of your children in 2022, so requirement 1 is satisfied.
Based only on the details you've provided, the only other possible question, when it comes to the requirement to file Form 8615, is whether your children are required to file a tax return (requirement 2). Assuming that they're your dependents, which isn't stated but is implied, they'd generally need to file a return, since their unearned income is over $1,150. See the TurboTax Help article Do I need to file my own taxes if I'm a dependent?, a dependent will generally need to file their own 2022 tax return if any of the following apply:
- Your earned income (money you made by working) exceeds $12,950
- Your unearned income (interest, dividends, capital gains, etc.) exceeds $1,150
- Your business or self-employment net income (gross minus expenses) is at least $400
- Your gross income (earned plus unearned) exceeds the larger of $1,150 or your earned income (up to $12,600) plus $350
As far as why your childrens' deductions are only $1,150 for all income, according to Standard Deduction for Dependents in IRS Publication 17:
The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the greater of:
- $1,150, or
- The individual's earned income for the year plus $400 (but not more than the regular standard deduction amount, generally $12,950).
And you're seeing the relatively high tax rate you speak of because of the small standard deduction.
[Edited 2/14/2023 | 8:13 am PST]
@NomeMan
