Questions on parents income for Form 8615 questionnaire do not apply if parents filed form 2555.

[umiboo]

Hi, I'm filling out the Form 8615 questionnaire for my children in TT, and the instructions I see do not make sense in the context of my return. 

As one example, see the question on 'Parents Capital Gains': "If the parents of [child] had any capital gains or losses, enter any amounts that appear on their 2024 Schedule D, the Qualified Dividend and Capital Gains Tax Worksheet line 3 and Form 4952." The data entry boxes given are for "Schedule D, Line 7", "Schedule D, Line 15 OR Qualified Div/Cap Gain Wksht Line 3", "Schedule D, Line 18", "Schedule D, Line 19", and "Form 4952, Line 4g".

I filed a 2555 with my return (live and work overseas at the moment), and I filed neither Schedule D nor Form 4952, nor do I have a Qualified Dividend/Capital Gains Tax Worksheet, so I don't know how to answer the above question.  TT made me a Schedule D worksheet, and figured out my tax using the Foreign Earned Income Worksheet.  What should I use here?

[pk]

@umiboo , I am at a major disadvantage because I am not familiar with the screens  for the ON-Line product.  However, I have windows  Home & Business and the screens should be pretty similar.  Since I cannot see your return, to be able to make sense of  your issue and/or replicate the situation, please could you provide the following info. at least  ( the more the better ).

(a) You a US person ( citizen/GreenCard ) ?   How about your spouse if you are filing MFJ ?

(b) Which country is your tax home?

(c)  The child/children  has/have passive income and to be taxed at parent's rate ?  Are they also US persons ?

(d) Since you said your income  is essentially active ONLY ( employed by local entity and/or  self-employed), is all your income excluded by form 2555 or is there some residual eligible for  FTC.  If so what is the magnitude ( roughly ) ?

(e) Is this your first year with this situation /issue ?

Any other helpful/ pertinent information ?

I will circle back once I hear from you --yes ?

[user17605613172]

@pk, thanks for the response.

(a) my husband and I are both US citizens and MFJ

(b) Croatia is our tax home

(c) our children are also citizens and they have only passive income, to be taxed at our rate.

(d) we have both active and passive income.  The active is entirely excluded in forms 2555, the passive is around a few 100k.

I always struggle since the TT questionnaires are not very well tailored to our tax situation (filing of 2555), but this year is particularly bad since the TT questionnaire is asking for information from forms we didn't file (e.g. schedule D)

[pk]

@umiboo , agree that because sometimes the questions are trying to cover a broad set of circumstances, they become rather abstruse for individual situation.  What I would suggest is  ( and only because I don't think the on-line versions allow "forms mode"), to download / print a copy of the form 8615 and essentially walk down as you answer  TurboTax's questions i.e. track what it is trying to fill out.  You will find the form and instructions for the form 8615 there at www.irs.gov -->  2024 Form 8615         --->  2024 Instructions for Form 8615

You will notice on the form 8615, entries 9 and 10  have check boxes to alert that certain forms  like schedule-D etc. were used on the parents' return.  Think that is all TurboTax is trying to do.

In the meantime I will try to work on the scenario on my copy of  Home & Business and look at the questions/ screens.  I have gone over the Tax Treaty between US and Croatia  ( that was not one I was familiar with and there are significant differences from many others that I am familiar with ).  My additional answers will definitely post 10/15/25.   That is the best I can do at the moment. 

I will come back tomorrow ( my time  -- California ).

pk

[umiboo]

@pk Thank you for persisting!  Yes, I agree, and I did try working through the 8615 with the instructions while answering the TT questions, but at entry 8 on the 8615 the two stopped corresponding, and it was impossible for me to figure out the correspondence, and why e.g. there were two sets of questions in TT about sibling passive income, when I entered all the info on the first set (it was the second set of questions that asked about schedule D etc).  I left that set empty in the end and filed (leaving it to the IRS to figure out if I did something incorrectly), but I would love to figure this out for next time. I don't think the complication is anything specific to Croatia, just the fact that, because we're filing 2555s, the way we figure out our taxes is the exception to the rule, and as you correctly said, the TT questions became abstruse.

[pk]

@umiboo , just wanted to close the loop with you . 

I created a scenario with both parents having active foreign source income, having one child with un-earned income, parents  required/choosing not  include child's income of 20,000-- thus 8615 coming into play.

The parents' active income completely excluded under  FEIE, plus  passive income untaxed  because of Foreign tax credit.  Parents' did have  SECA  tax  but it looked wrong ( I have not investigated why it looked so low --will do )

The child's return of 20,000 was taxed at parents' marginal rate using 8615.

I did not find the questions on the screens unusual ---  since I had no Schedule-D or other items , I left these  entry boxes blank ( could have placed zero but that is extra useless work ).

So I am left with the feeling that the on-line screens must be different  from the windows H&B version or you would have had a easy time.  My humble apologies for the inconvenience.

Is there more I can do for you ?

pk

[umiboo]

@pk

[umiboo]

@pk thank you for following up.  Apologies if I was unclear before, but I found in the online version that:

- the form box references for parent's income in the 8615 questionnaire (Line 😎 were incorrect (as they referred to forms we didn't use in computation of our taxes e.g. QD/CGT worksheet).  This issue I resolved by doing the 8615 computations myself using the downloaded version of the instructions.

-  the references to schedule D that confused me were in reporting sibling unearned income (we have two kids).  Here I had no idea what, specifically, the questionnaire was asking me, since I had already entered the sibling capital gains tax values in the previous question, and neither sibling had to file Schedule D.

Please don't waste any more time on this, I think it's a lost cause -  TT seems to become more opaque and less relevant to me every year, so I think I'm not going to throw any more money at it from now on.