Below
is a complete explanation of the Form. If you feel this is
incorrect, review your return to make sure you don't have unearned income.
Purpose of
Form
For children under age 18
and certain older children described below in Who Must File, unearned income
over $2,100 is taxed at the parent's rate if the parent's rate is higher than
the child's. If the child's unearned income is more than $2,100, use Form 8615
to figure the child's tax.
Unearned Income
For Form 8615, “unearned
income” includes all taxable income other than earned income as defined later.
Unearned 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, taxable
scholarship and fellowship grants not reported on Form W-2, unemployment
compensation, alimony, 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 all of the following conditions.
1. The child had more
than $2,100 of unearned income.
2. The child is required
to file a tax return.
3. The child either: a.
Was under age 18 at the end of 2016, b. Was age 18 at the end of 2016 and did
not have earned income that was more than half of the child's support, or c.
Was a full-time student at least age 19 and under age 24 at the end of 2016 and
did not have earned income that was more than half of the child's
support(Earned income is defined later. Support is defined below.)
4. At least one of the
child's parents was alive at the end of 2016.
5.
The child does not file a joint return for 2016. For these rules, the term
“child” includes a legally adopted child and a stepchild. These
rules apply whether or not the child is a dependent. These rules do not apply if neither of the
child’s parents were living at the end of the year.
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Unearned Income
Definition
Unearned income.
Income other than earned income. This is investment-type income and includes
interest, dividends, and capital gains (including capital gain distributions),
rents, royalties, etc. Distributions of interest, dividends, capital gains, and
other unearned income from a trust are also unearned income to a beneficiary of
the trust. However, for purposes of completing Form 8615, a taxable
distribution from a qualified disability trust is considered earned income.
