Is there a way to capture income taxes paid by siblings when completing Form 8615? It looks like my kids are having to pay twice for each other's income.
Line 7 of Form 8615 requires the total from Line 5 Form 8615 for all other children. This is used to calculate Line 8, the family's total taxable income. Line 8 is in turn used to calculate the tax amount based on the parent's filing status, Line 9. Line 10 is reported from Line 16 of my 1040 which is the taxes I have paid. But where are the taxes my other child paid?
When I add Child 2's income to Child 1's Form 8615 it increases the family's total taxable income but my paid taxes remains stable. The increased family income raises Child 1's tax payment AND it also raises Child 2's tax payment when I do his/her Form 8615. They are both having to pay for the increased difference between what I should have paid if everything was just under my taxes and what I actually paid.
Excluding Child 2's from Line 7 lowers which in turn lowers Lines 8 and 9. Ultimately, this lowers the taxes Child 1 owes. But it's incorrect and the IRS ever looked they would see the information was reported. NOTE: Including the other child's income does not change our family's marginal tax rate.
