I'm filing my minor son's taxes. Capital gains only, I filled form 8615 but Turbotax insists on taking the standard deduction.

[tmaller]

My understanding is that itemized/standard deduction is applied for earned income and not capital gains. But Turbotax doesnt let me remove it.

[MindyB]

The IRS grants every dependent a limited standard deduction. Even with zero earned income, a minor is entitled to a standard deduction, which is $1,350 for the 2025 tax year, to reduce their total capital gains before the "Kiddie Tax" calculations on Form 8615 begins. The first $1,350 of his gains is tax-free due to this deduction.

Removing the deduction would increase his tax bill by making that initial $1,350 taxable, so the software is ensuring he only pays tax on the portion of his investment income that exceeds the federal threshold.

Here's some information you may find helpful: At What Income Does a Minor Have to File an Income Tax Return? and  Tax Filing Requirements for Children

[tmaller]

Hi Mindy,

I'm ok with the $1350 deduction, but Turbotax insists on a $15,750 deduction. 

I said there is no w2, only capital gain is entered on a stocl sale, I filled the 8615 with parents income and also his sibling capital gain. 

No matter what - TT applies the $15750 deduction.

[MelindaS1]

It sounds like you may be entering this income in the regular investment income section, and not the Child's Income section of the tax return input. Follow the below navigating steps to enter his income for the year, then re-check his forms output to verify that the standard deduction has been limited correctly:

TurboTax Online

1. Go to the child income screen under Wages & Income.
2. Follow the onscreen instructions to determine if the income can be included on your return or if your child needs to file their own return.

TurboTax Desktop

1. Open or continue your return.
2. Go to Federal Taxes.
3. Go to Wages & Income.
4. If asked How do you want to enter…?, select I’ll choose what I work on.
5. Under Less Common Income, select Start or Update next to Child's Income.
6. Answer Yes to both Any Child's Income? and Child Required to File?
7. Select Continue on the Reporting Your Child's Income screen.
8. Follow the onscreen instructions to determine if the income can be included on your return or if your child needs to file their own return.

TurboTax - How do I report my child's investment income?