Q. So, to confirm, if this is the “lower number,” our dependent will not owe any tax (at their rate) on any portion of the $7,137 unearned income?
A. Essentially, yes. What happens is that form ...
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Q. So, to confirm, if this is the “lower number,” our dependent will not owe any tax (at their rate) on any portion of the $7,137 unearned income?
A. Essentially, yes. What happens is that form 8615 is used to calculate the student's tax, instead of some other form or just looking up taxable income in the tax tables.
Q. –Re: the need (for the student) to file, in past exchanges you’ve said anyone with earned income > $400 needs to file. Is this self-employment income only?
A. Yes.
Q. Beyond having total income > $15,750, my student needs to file to report taxable scholarships and 529 taxable earnings, right?
A. Yes, but only if the filing threshold's for those income types are met.*
Q. Taxed at their rate, not ours?
A. That depends on the various amounts and the form 8615 calculation. But, probably not from what you've described.
* Your dependent student must file a tax return for 2024 if he had any of the following:
Total income (wages, salaries, taxable scholarship etc.) of more than $14,600 ($15,750 for 2025).
Unearned income (interest, dividends, capital gains, unemployment, taxable portion of 529 distribution, but not any scholarship) of more than $1300.
Unearned income (not including scholarship) over $450 and gross income of more than $1300 ($1350 for 2025).
Household employee income (e.g. baby sitting, lawn mowing) over $2600 ($14,600 if under age 18)
Other self employment income over $400, including money on a form 1099-NEC