Form 8615 Triggered by Other Misc Taxable Income

[Lionel3]

So I am trying to do my kids taxes and trying to pay taxes on what I paid them during the year of which taxes have not been paid.  My CPA did it with a Schedule 1, Schedule 2 and SE. 

When I try to create a Schedule 1 by going to

• Miscellaneous Income, 1099-A, 1099-C
• Other Reportable Income
• Create a new item

It then triggers the Form 8615 that I can't delete.  The item created is taxable income and it should be considered earned income so why is it triggering the Form 8615?

If I delete the line item for income, Form 8615 disappears as well but as soon as I create it, Form 8615 comes back.

How do I report earned taxable income on the Schedule 1 without triggering Form 8615?  I was able to file for the other child without that problem but cannot reproduce what I did.

That one created a schedule 1 but no schedule 2 and schedule SE. 

How do I file a 1040 with Schedule 1, Schedule 2 and Schedule SE for a minor?

[Mike9241]

they should have received form 1099-NEC.  with that form you link to schedule C which carries to schedule 1. form 1040-SE is automatically generated which carries to schedule 2.

form 8615 may or may not be required. here are the tests

the form must be filed for any child who meets all of the following conditions.
1. The child had more than $2,200 of unearned income. (what you paid them is earned income)

2. The child is required to file a tax return.

3. The child either:
a. Was under age 18 at the end of 2020,
b. Was age 18 at the end of 2020 and didn’t 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 2020 and didn’t have earned income that was more than
half of the child's support.
4. At least one of the child's parents was alive at the end of
2020.
5. The child doesn’t file a joint return for 2020.

you may have a tax issue by not issuing them form w-2  (not a 1099) for their compensation. but that's a matter between you and the IRS. 

[Lionel3]

Thanks Mike for the quick response.

All of the conditions are met for Form 8615 except the $2200 of unearned income.  I am reporting $6000 of misc taxable income.  Why is it generating Form 8615 still?

How did I file the other child without triggering Form 8615?

I think my CPA filed them as self employed last year which is why it trigger Schedule 1, Schedule 2 and Schedule SE.

[DErwin]

I have royalty income from oil and gas on my property.  I reported it from the 1099 MISC that I received but somehow I have triggered the generation of a Schedule C which is cousing me problems.  Alos the 1099 MISC data does not show up on the summary line for entry of this form.  Why

[DaveF1006]

When you entered your 1099 MISC, there is a screen that asks if this is investment or royalty income. More than likely, you selected royalty income. While it is true your income came from a royalty, here though, you will indicate this is investment property unless you are in the business of operating a natural resource business.  If that is the case, the program will assume you are operating a business and will generate a Schedule C if you select royalty income in this screen.

Go back and change your selection to investment income and this will generate a Schedule E, like it should.  Here is what the screen should look like where you will make that selection. See below!!

Now, as far as the the 1099 MISC data not showing up on the summary line, i am not sure what summary line are you referring to?  Are you referring to a 1040 or to a View summary summary page in the tax tools section?

Anyhow, make the correction that I suggest.  Make your correction first like I suggest and then go to tax tools>tools>delete a form.  Check to see if Schedule C is still there.  if so, then go to tax tools>tools>delete a form.  Delete all Schedule C and Schedule C worksheets you see.

Let us know if this helps.

@DErwin