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Free Online State Tax Preparation

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Free Online State Tax Preparation

Free online state tax preparation Publication 17 - Introductory Material Table of Contents What's New Reminders IntroductionIcons. Free online state tax preparation Ordering forms and publications. Free online state tax preparation Tax questions. Free online state tax preparation All material in this publication may be reprinted freely. Free online state tax preparation A citation to Your Federal Income Tax (2013) would be appropriate. Free online state tax preparation The explanations and examples in this publication reflect the interpretation by the Internal Revenue Service (IRS) of: Tax laws enacted by Congress, Treasury regulations, and Court decisions. Free online state tax preparation However, the information given does not cover every situation and is not intended to replace the law or change its meaning. Free online state tax preparation This publication covers some subjects on which a court may have made a decision more favorable to taxpayers than the interpretation by the IRS. Free online state tax preparation Until these differing interpretations are resolved by higher court decisions or in some other way, this publication will continue to present the interpretations by the IRS. Free online state tax preparation All taxpayers have important rights when working with the IRS. Free online state tax preparation These rights are described in Your Rights as a Taxpayer in the back of this publication. Free online state tax preparation What's New This section summarizes important tax changes that took effect in 2013. Free online state tax preparation Most of these changes are discussed in more detail throughout this publication. Free online state tax preparation Future developments. Free online state tax preparation  For the latest information about the tax law topics covered in this publication, including information about any tax legislation, go to www. Free online state tax preparation irs. Free online state tax preparation gov/pub17. Free online state tax preparation Additional Medicare Tax. Free online state tax preparation  Beginning in 2013, a 0. Free online state tax preparation 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Free online state tax preparation See Form 8959 and its instructions. Free online state tax preparation Net Investment Income Tax. Free online state tax preparation  Beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). Free online state tax preparation The NIIT is 3. Free online state tax preparation 8% of the smaller of (a) your net investment income or (b) the excess of your modified adjusted gross income over: $125,000 if married filing separately, $250,000 if married filing jointly or qualifying widow(er), or $200,000 if any other filing status. Free online state tax preparation See Form 8960 and its instructions. Free online state tax preparation Change in tax rates. Free online state tax preparation  The highest tax rate is 39. Free online state tax preparation 6%. Free online state tax preparation For more information, see the 2013 Tax Computation Worksheet or the 2013 Tax Rate Schedules near the end of this publication. Free online state tax preparation Tax rate on net capital gain and qualified dividends. Free online state tax preparation  The maximum tax rate of 15% on net capital gain and qualified dividends has increased to 20% for some taxpayers. Free online state tax preparation See chapter 16. Free online state tax preparation Medical and dental expenses. Free online state tax preparation  You can deduct only the part of your medical and dental expenses that is more than 10% of your adjusted gross income (7. Free online state tax preparation 5% if either you or your spouse is age 65 or older). Free online state tax preparation See chapter 21. Free online state tax preparation Personal exemption amount increased for certain taxpayers. Free online state tax preparation  Your personal exemption is increased to $3,900. Free online state tax preparation But the amount is reduced if your adjusted gross income is more than: $150,000 if married filing separately, $250,000 if single, $275,000 if head of household, or $300,000 if any other filing status. Free online state tax preparation See chapter 3. Free online state tax preparation Limit on itemized deductions. Free online state tax preparation  You may not be able to deduct all of your itemized deductions if your adjusted gross income is more than: $150,000 if married filing separately, $250,000 if single, $275,000 if head of household, or $300,000 if any other filing status. Free online state tax preparation See chapter 29. Free online state tax preparation Same-sex marriages. Free online state tax preparation  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Free online state tax preparation See chapter 2. Free online state tax preparation If you meet certain requirements, you may be able to file amended returns to change your filing status for some earlier years. Free online state tax preparation For details on filing amended returns, see chapter 1. Free online state tax preparation Health flexible spending arrangements (FSAs). Free online state tax preparation  You cannot have more than $2,500 in salary reduction contributions made to a health FSA for plan years beginning after 2012. Free online state tax preparation See chapter 5. Free online state tax preparation Expiring credits. Free online state tax preparation  The plug-in electric vehicle credit and the refundable part of the credit for prior year minimum tax have expired. Free online state tax preparation You cannot claim either one on your 2013 return. Free online state tax preparation See chapter 37. Free online state tax preparation Ponzi-type investment schemes. Free online state tax preparation  There are new rules for how to claim a theft loss deduction on Form 4684 due to a Ponzi-type investment scheme. Free online state tax preparation See chapter 25. Free online state tax preparation Home office deduction simplified method. Free online state tax preparation  If you can take a home office deduction, you may be able to use a simplified method to figure it. Free online state tax preparation See Publication 587. Free online state tax preparation Standard mileage rates. Free online state tax preparation  The 2013 rate for business use of your car is increased to 56½ cents a mile. Free online state tax preparation See chapter 26. Free online state tax preparation The 2013 rate for use of your car to get medical care is increased to 24 cents a mile. Free online state tax preparation See chapter 21. Free online state tax preparation The 2013 rate for use of your car to move is increased to 24 cents a mile. Free online state tax preparation See Publication 521, Moving Expenses. Free online state tax preparation Reminders Listed below are important reminders and other items that may help you file your 2013 tax return. Free online state tax preparation Many of these items are explained in more detail later in this publication. Free online state tax preparation Enter your social security number (SSN). Free online state tax preparation  Enter your SSN in the space provided on your tax form. Free online state tax preparation If you filed a joint return for 2012 and are filing a joint return for 2013 with the same spouse, enter your names and SSNs in the same order as on your 2012 return. Free online state tax preparation See chapter 1. Free online state tax preparation Secure your tax records from identity theft. Free online state tax preparation  Identity theft occurs when someone uses your personal information, such as your name, SSN, or other identifying information, without your permission, to commit fraud or other crimes. Free online state tax preparation An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund. Free online state tax preparation For more information about identity theft and how to reduce your risk from it, see chapter 1. Free online state tax preparation Taxpayer identification numbers. Free online state tax preparation  You must provide the taxpayer identification number for each person for whom you claim certain tax benefits. Free online state tax preparation This applies even if the person was born in 2013. Free online state tax preparation Generally, this number is the person's social security number (SSN). Free online state tax preparation See chapter 1. Free online state tax preparation Foreign source income. Free online state tax preparation  If you are a U. Free online state tax preparation S. Free online state tax preparation citizen with income from sources outside the United States (foreign income), you must report all such income on your tax return unless it is exempt by U. Free online state tax preparation S. Free online state tax preparation law. Free online state tax preparation This is true whether you live inside or outside the United States and whether or not you receive a Form W-2 or Form 1099 from the foreign payer. Free online state tax preparation This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents and royalties). Free online state tax preparation If you live outside the United States, you may be able to exclude part or all of your foreign source earned income. Free online state tax preparation For details, see Publication 54, Tax Guide for U. Free online state tax preparation S. Free online state tax preparation Citizens and Resident Aliens Abroad. Free online state tax preparation Foreign financial assets. Free online state tax preparation  If you had foreign financial assets in 2013, you may have to file Form 8938 with your return. Free online state tax preparation Check www. Free online state tax preparation IRS. Free online state tax preparation gov/form8938 for details. Free online state tax preparation Automatic 6-month extension to file tax return. Free online state tax preparation  You can use Form 4868, Application for Automatic Extension of Time To File U. Free online state tax preparation S. Free online state tax preparation Individual Income Tax Return, to obtain an automatic 6-month extension of time to file your tax return. Free online state tax preparation See chapter 1. Free online state tax preparation Include your phone number on your return. Free online state tax preparation  To promptly resolve any questions we have in processing your tax return, we would like to be able to call you. Free online state tax preparation Please enter your daytime telephone number on your tax form next to your signature and occupation. Free online state tax preparation If you are filing a joint return, you can enter either your or your spouse's daytime phone number. Free online state tax preparation Payment of taxes. Free online state tax preparation   You can pay your taxes online, by phone, or by check or money order. Free online state tax preparation You can make a direct transfer from your bank account or use a credit or debit card. Free online state tax preparation If you e-file, you can schedule an electronic payment. Free online state tax preparation See chapter 1. Free online state tax preparation Faster ways to file your return. Free online state tax preparation  The IRS offers fast, accurate ways to file your tax return information without filing a paper tax return. Free online state tax preparation You can use IRS e-file (electronic filing). Free online state tax preparation See chapter 1. Free online state tax preparation Free electronic filing. Free online state tax preparation  You may be able to file your 2013 taxes online for free. Free online state tax preparation See chapter 1. Free online state tax preparation Change of address. Free online state tax preparation  If you change your address, you should notify the IRS. Free online state tax preparation See Change of Address in chapter 1. Free online state tax preparation Refund on a late filed return. Free online state tax preparation  If you were due a refund but you did not file a return, you generally must file your return within 3 years from the date the return was due (including extensions) to get that refund. Free online state tax preparation See chapter 1. Free online state tax preparation Frivolous tax returns. Free online state tax preparation  The IRS has published a list of positions that are identified as frivolous. Free online state tax preparation The penalty for filing a frivolous tax return is $5,000. Free online state tax preparation See chapter 1. Free online state tax preparation Filing erroneous claim for refund or credit. Free online state tax preparation  You may have to pay a penalty if you file an erroneous claim for refund or credit. Free online state tax preparation See chapter 1. Free online state tax preparation Privacy Act and paperwork reduction information. Free online state tax preparation   The IRS Restructuring and Reform Act of 1998, the Privacy Act of 1974, and the Paperwork Reduction Act of 1980 require that when we ask you for information we must first tell you what our legal right is to ask for the information, why we are asking for it, how it will be used, what could happen if we do not receive it, and whether your response is voluntary, required to obtain a benefit, or mandatory under the law. Free online state tax preparation A complete statement on this subject can be found in your tax form instructions. Free online state tax preparation Customer service for taxpayers. Free online state tax preparation  You can set up a personal appointment at the most convenient Taxpayer Assistance Center, on the most convenient business day. Free online state tax preparation See How To Get Tax Help in the back of this publication. Free online state tax preparation Preparer e-file mandate. Free online state tax preparation  Most paid preparers must e-file returns they prepare and file. Free online state tax preparation Your preparer may make you aware of this requirement and the options available to you. Free online state tax preparation Treasury Inspector General for Tax Administration. Free online state tax preparation   If you want to confidentially report misconduct, waste, fraud, or abuse by an IRS employee, you can call 1-800-366-4484 (call 1-800-877-8339 if you are deaf, hard of hearing, or have a speech disability, and are using TTY/TDD equipment). Free online state tax preparation You can remain anonymous. Free online state tax preparation Photographs of missing children. Free online state tax preparation  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free online state tax preparation Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free online state tax preparation You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free online state tax preparation Introduction This publication covers the general rules for filing a federal income tax return. Free online state tax preparation It supplements the information contained in your tax form instructions. Free online state tax preparation It explains the tax law to make sure you pay only the tax you owe and no more. Free online state tax preparation How this publication is arranged. Free online state tax preparation   This publication closely follows Form 1040, U. Free online state tax preparation S. Free online state tax preparation Individual Income Tax Return. Free online state tax preparation It is divided into six parts which cover different sections of Form 1040. Free online state tax preparation Each part is further divided into chapters which generally discuss one line of the form. Free online state tax preparation Do not worry if you file Form 1040A or Form 1040EZ. Free online state tax preparation Anything included on a line of either of these forms is also included on Form 1040. Free online state tax preparation   The table of contents inside the front cover and the index in the back of the publication are useful tools to help you find the information you need. Free online state tax preparation What is in this publication. Free online state tax preparation   The publication begins with the rules for filing a tax return. Free online state tax preparation It explains: Who must file a return, Which tax form to use, When the return is due, How to e-file your return, and Other general information. Free online state tax preparation It will help you identify which filing status you qualify for, whether you can claim any dependents, and whether the income you receive is taxable. Free online state tax preparation The publication goes on to explain the standard deduction, the kinds of expenses you may be able to deduct, and the various kinds of credits you may be able to take to reduce your tax. Free online state tax preparation   Throughout the publication are examples showing how the tax law applies in typical situations. Free online state tax preparation Also throughout the publication are flowcharts and tables that present tax information in an easy-to-understand manner. Free online state tax preparation   Many of the subjects discussed in this publication are discussed in greater detail in other IRS publications. Free online state tax preparation References to those other publications are provided for your information. Free online state tax preparation Icons. Free online state tax preparation   Small graphic symbols, or icons, are used to draw your attention to special information. Free online state tax preparation See Table 1 later for an explanation of each icon used in this publication. Free online state tax preparation What is not covered in this publication. Free online state tax preparation   Some material that you may find helpful is not included in this publication but can be found in your tax form instruction booklet. Free online state tax preparation This includes lists of: Where to report certain items shown on information documents, and Recorded tax information topics (TeleTax). Free online state tax preparation   If you operate your own business or have other self-employment income, such as from babysitting or selling crafts, see the following publications for more information. Free online state tax preparation Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ). Free online state tax preparation Publication 535, Business Expenses. Free online state tax preparation Publication 587, Business Use of Your Home (Including Use by Daycare Providers). Free online state tax preparation Help from the IRS. Free online state tax preparation   There are many ways you can get help from the IRS. Free online state tax preparation These are explained under How To Get Tax Help in the back of this publication. Free online state tax preparation Comments and suggestions. Free online state tax preparation   We welcome your comments about this publication and your suggestions for future editions. Free online state tax preparation   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free online state tax preparation NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free online state tax preparation Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free online state tax preparation   You can send your comments from www. Free online state tax preparation irs. Free online state tax preparation gov/formspubs/. Free online state tax preparation Click on “More Information” and then on “Comment on Tax Forms and Publications”. Free online state tax preparation   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free online state tax preparation Ordering forms and publications. Free online state tax preparation   Visit www. Free online state tax preparation irs. Free online state tax preparation gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free online state tax preparation Internal Revenue Service 1201 N. Free online state tax preparation Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free online state tax preparation   If you have a tax question, check the information available on IRS. Free online state tax preparation gov or call 1-800-829-1040. Free online state tax preparation We cannot answer tax questions sent to either of the above addresses. Free online state tax preparation IRS mission. Free online state tax preparation   Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. Free online state tax preparation Table 1. Free online state tax preparation Legend of Icons Icon Explanation Items that may cause you particular problems, or an alert about pending legislation that may be enacted after this publication goes to print. Free online state tax preparation An Internet site or an email address. Free online state tax preparation An address you may need. Free online state tax preparation Items you should keep in your personal records. Free online state tax preparation Items you may need to figure or a worksheet you may need to complete and keep for your records. Free online state tax preparation An important phone number. Free online state tax preparation Helpful information you may need. Free online state tax preparation Prev  Up  Next   Home   More Online Publications
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The Free Online State Tax Preparation

Free online state tax preparation Publication 929 - Main Content Table of Contents Part 1. Free online state tax preparation Rules for All Dependents Filing RequirementsEarned Income Only Unearned Income Only Both Earned and Unearned Income Other Filing Requirements Should a Return Be Filed Even If Not Required? Responsibility for Child's ReturnThird party designee. Free online state tax preparation Designated as representative. Free online state tax preparation IRS notice. Free online state tax preparation Standard DeductionStandard Deduction of Zero Dependent's Own Exemption Withholding From WagesExceptions. Free online state tax preparation Part 2. Free online state tax preparation Tax on Unearned Income of Certain ChildrenWhich Parent's Return To Use Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, Lines A–C) Step 1. Free online state tax preparation Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. Free online state tax preparation Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. Free online state tax preparation Figuring the Child's Tax (Form 8615, Part III) Alternative Minimum Tax Illustrated Example Part 1. Free online state tax preparation Rules for All Dependents This part of the publication discusses the filing requirements for dependents, who is responsible for a child's return, how to figure a dependent's standard deduction and exemption (if any), and whether a dependent can claim exemption from federal income tax withholding. Free online state tax preparation Filing Requirements Whether a dependent has to file a return generally depends on the amount of the dependent's earned and unearned income and whether the dependent is married, is age 65 or older, or is blind. Free online state tax preparation A dependent may have to file a return even if his or her income is less than the amount that would normally require a return. Free online state tax preparation See Other Filing Requirements, later. Free online state tax preparation The following sections apply to dependents with: Earned income only, Unearned income only, and Both earned and unearned income. Free online state tax preparation  To find out whether a dependent must file, read the section that applies, or use Table 1. Free online state tax preparation Earned Income Only A dependent whose gross income is only earned income must file a return if the gross income is more than the amount listed in the following table. Free online state tax preparation Marital Status Amount Single   Under 65 and not blind $6,100 Either 65 or older or blind $7,600 65 or older and blind $9,100 Married*   Under 65 and not blind $6,100 Either 65 or older or blind $7,300 65 or older and blind $8,500 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). Free online state tax preparation Example. Free online state tax preparation William is 16. Free online state tax preparation His mother claims an exemption for him on her income tax return. Free online state tax preparation He worked part time on weekends during the school year and full time during the summer. Free online state tax preparation He earned $7,000 in wages. Free online state tax preparation He did not have any unearned income. Free online state tax preparation He must file a tax return because he has earned income only and his gross income is more than $6,100. Free online state tax preparation If he is blind, he does not have to file a return because his gross income is not more than $7,600. Free online state tax preparation Unearned Income Only A dependent whose gross income is only unearned income must file a return if the gross income is more than the amount listed in the following table. Free online state tax preparation Marital Status Amount Single   Under 65 and not blind $1,000 Either 65 or older or blind $2,500 65 or older and blind $4,000 Married*   Under 65 and not blind $1,000 Either 65 or older or blind $2,200 65 or older and blind $3,400 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). Free online state tax preparation Example. Free online state tax preparation Sarah is 18 and single. Free online state tax preparation Her parents can claim an exemption for her on their income tax return. Free online state tax preparation She received $1,970 of taxable interest and dividend income. Free online state tax preparation She did not work during the year. Free online state tax preparation She must file a tax return because she has unearned income only and her gross income is more than $1,000. Free online state tax preparation If she is blind, she does not have to file a return because she has unearned income only and her gross income is not more than $2,500. Free online state tax preparation Election to report child's unearned income on parent's return. Free online state tax preparation   A parent of a child under age 19 (or under age 24 if a full-time student) may be able to elect to include the child's interest and dividend income on the parent's return. Free online state tax preparation See Parent's Election To Report Child's Interest and Dividends in Part 2. Free online state tax preparation If the parent makes this election, the child does not have to file a return. Free online state tax preparation Both Earned and Unearned Income A dependent who has both earned and unearned income generally must file a return if the dependent's gross income is more than line 5 of the following worksheet. Free online state tax preparation Filing Requirement Worksheet for Most Dependents 1. Free online state tax preparation Enter dependent's earned income plus $350     2. Free online state tax preparation Minimum amount   $1,000 3. Free online state tax preparation Compare lines 1 and 2. Free online state tax preparation Enter the larger amount     4. Free online state tax preparation Maximum amount   6,100 5. Free online state tax preparation Compare lines 3 and 4. Free online state tax preparation Enter the smaller amount     6. Free online state tax preparation Enter the dependent's gross income. Free online state tax preparation If line 6 is more than line 5, the dependent must file an income tax return. Free online state tax preparation If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Free online state tax preparation       Table 1. Free online state tax preparation 2013 Filing Requirements for Dependents If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a return. Free online state tax preparation   See the definitions of “dependent,”“earned income,”“unearned income,” and “gross income” in the Glossary. Free online state tax preparation   Single dependents—Were you either age 65 or older or blind?     No. Free online state tax preparation You must file a return if any of the following apply. Free online state tax preparation       Your unearned income was over $1,000. Free online state tax preparation Your earned income was over $6,100. Free online state tax preparation Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. Free online state tax preparation         Yes. Free online state tax preparation You must file a return if any of the following apply. Free online state tax preparation     Your unearned income was over $2,500 ($4,000 if 65 or older and blind), Your earned income was over $7,600 ($9,100 if 65 or older and blind), Your gross income was more than the larger of—       $2,500 ($4,000 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,850 ($3,350 if 65 or older and blind). Free online state tax preparation       Married dependents—Were you either age 65 or older or blind?     No. Free online state tax preparation You must file a return if any of the following apply. Free online state tax preparation       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Free online state tax preparation Your unearned income was over $1,000. Free online state tax preparation Your earned income was over $6,100. Free online state tax preparation Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. Free online state tax preparation       Yes. Free online state tax preparation You must file a return if any of the following apply. Free online state tax preparation       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Free online state tax preparation Your unearned income was over $2,200 ($3,400 if 65 or older and blind), Your earned income was over $7,300 ($8,500 if 65 or older and blind), Your gross income was more than the larger of—       $2,200 ($3,400 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,550 ($2,750 if 65 or older and blind). Free online state tax preparation       Example 1. Free online state tax preparation Joe is 20, single, not blind, and a full-time college student. Free online state tax preparation He does not provide more than half of his own support, and his parents claim an exemption for him on their income tax return. Free online state tax preparation He received $200 taxable interest income and earned $2,750 from a part-time job. Free online state tax preparation He does not have to file a tax return because his gross income of $2,950 ($200 interest plus $2,750 in wages) is not more than $3,100, the amount on line 5 of his filled-in Filing Requirement Worksheet for Most Dependents (shown next). Free online state tax preparation Filled-in Example 1 Filing Requirement Worksheet  for Most Dependents 1. Free online state tax preparation Enter dependent's earned income plus $350   $ 3,100 2. Free online state tax preparation Minimum amount   1,000 3. Free online state tax preparation Compare lines 1 and 2. Free online state tax preparation Enter the larger amount   3,100 4. Free online state tax preparation Maximum amount   6,100 5. Free online state tax preparation Compare lines 3 and 4. Free online state tax preparation Enter the smaller amount   3,100 6. Free online state tax preparation Enter the dependent's gross income. Free online state tax preparation If line 6 is more than line 5, the dependent must file an income tax return. Free online state tax preparation If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Free online state tax preparation   $ 2,950   Example 2. Free online state tax preparation The facts are the same as in Example 1 except that Joe had $600 taxable interest income. Free online state tax preparation He must file a tax return because his gross income of $3,350 ($600 interest plus $2,750 wages) is more than $3,100, the amount on line 5 of his filled-in worksheet (shown next). Free online state tax preparation Filled-in Example 2 Filing Requirement Worksheet for Most Dependents 1. Free online state tax preparation Enter dependent's earned income plus $350   $ 3,100 2. Free online state tax preparation Minimum amount   1,000 3. Free online state tax preparation Compare lines 1 and 2. Free online state tax preparation Enter the larger amount   3,100 4. Free online state tax preparation Maximum amount   6,100 5. Free online state tax preparation Compare lines 3 and 4. Free online state tax preparation Enter the smaller amount   3,100 6. Free online state tax preparation Enter the dependent's gross income. Free online state tax preparation If line 6 is more than line 5, the dependent must file an income tax return. Free online state tax preparation If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. Free online state tax preparation   $ 3,350   Age 65 or older or blind. Free online state tax preparation A dependent who is age 65 or older or blind must file a return if his or her gross income is more than line 7 of the following worksheet. Free online state tax preparation Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. Free online state tax preparation Enter dependent's earned income plus $350     2. Free online state tax preparation Minimum amount   $1,000 3. Free online state tax preparation Compare lines 1 and 2. Free online state tax preparation Enter the larger amount     4. Free online state tax preparation Maximum amount   6,100 5. Free online state tax preparation Compare lines 3 and 4. Free online state tax preparation Enter the smaller amount     6. Free online state tax preparation Enter the amount from the following table that applies to the dependent       Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. Free online state tax preparation Add lines 5 and 6. Free online state tax preparation Enter the total     8. Free online state tax preparation Enter the dependent's gross income. Free online state tax preparation If line 8 is more than line 7, the dependent must file an income tax return. Free online state tax preparation If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more     Example 3. Free online state tax preparation The facts are the same as in Example 2 except that Joe is also blind. Free online state tax preparation He does not have to file a return because his gross income of $3,350 is not more than $4,600, the amount on line 7 of his filled-in Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or Blind (shown next). Free online state tax preparation   Filled-in Example 3 Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. Free online state tax preparation Enter dependent's earned income plus $350   $3,100 2. Free online state tax preparation Minimum amount   1,000 3. Free online state tax preparation Compare lines 1 and 2. Free online state tax preparation Enter the larger amount   3,100 4. Free online state tax preparation Maximum amount   6,100 5. Free online state tax preparation Compare lines 3 and 4. Free online state tax preparation Enter the smaller amount   3,100 6. Free online state tax preparation Enter the amount from the following table that applies to the dependent   1,500   Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. Free online state tax preparation Add lines 5 and 6. Free online state tax preparation Enter the total   4,600 8. Free online state tax preparation Enter the dependent's gross income. Free online state tax preparation If line 8 is more than line 7, the dependent must file an income tax return. Free online state tax preparation If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more   $3,350 Other Filing Requirements Some dependents may have to file a tax return even if their income is less than the amount that would normally require them to file a return. Free online state tax preparation A dependent must file a tax return if he or she owes any other taxes, such as: Social security and Medicare taxes on tips not reported to his or her employer or on wages received from an employer who did not withhold these taxes, Uncollected social security and Medicare or railroad retirement taxes on tips reported to his or her employer or on group-term life insurance, Alternative minimum tax, Additional tax on a health savings account from Form 8889, Part III, Recapture taxes, such as the tax from recapture of an education credit, or Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. Free online state tax preparation But if the dependent is filing a return only because of this tax, the dependent can file Form 5329 by itself. Free online state tax preparation A dependent must also file a tax return if he or she: Had wages of $108. Free online state tax preparation 28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or Had net earnings from self-employment of at least $400. Free online state tax preparation Spouse itemizes. Free online state tax preparation   A dependent must file a return if the dependent's spouse itemizes deductions on a separate return and the dependent has $5 or more of gross income (earned and/or unearned). Free online state tax preparation Should a Return Be Filed Even If Not Required? Even if a dependent does not meet any of the filing requirements discussed earlier, he or she should file a tax return if either of the following applies. Free online state tax preparation Income tax was withheld from his or her income. Free online state tax preparation He or she qualifies for the earned income credit, additional child tax credit, health coverage tax credit, or refundable American opportunity education credit. Free online state tax preparation See the tax return instructions to find out who qualifies for these credits. Free online state tax preparation  By filing a return, the dependent can get a refund. Free online state tax preparation Responsibility for Child's Return Generally, a child is responsible for filing his or her own tax return and for paying any tax, penalties, or interest on that return. Free online state tax preparation If a child cannot file his or her own return for any reason, such as age, the child's parent, guardian, or other legally responsible person must file it for the child. Free online state tax preparation Signing the child's return. Free online state tax preparation   If the child cannot sign his or her return, a parent or guardian must sign the child's name followed by the words “By (signature), parent (or guardian) for minor child. Free online state tax preparation ” Authority of parent or guardian. Free online state tax preparation   A parent or guardian who signs a return on a child's behalf can deal with the IRS on all matters connected with the return. Free online state tax preparation   In general, a parent or guardian who does not sign the child's return can only provide information concerning the child's return and pay the child's tax. Free online state tax preparation That parent or guardian is not entitled to receive information from the IRS or legally bind the child to a tax liability arising from the return. Free online state tax preparation Third party designee. Free online state tax preparation   A child's parent or guardian who does not sign the child's return may be authorized, as a third party designee, to discuss the processing of the return with the IRS as well as provide information concerning the return. Free online state tax preparation The child or the person signing the return on the child's behalf must check the “Yes” box in the “Third Party Designee” area of the return and name the parent or guardian as the designee. Free online state tax preparation   If designated, a parent or guardian can respond to certain IRS notices and receive information about the processing of the return and the status of a refund or payment. Free online state tax preparation This designation does not authorize the parent or guardian to receive any refund check, bind the child to any tax liability, or otherwise represent the child before the IRS. Free online state tax preparation See the return instructions for more information. Free online state tax preparation Designated as representative. Free online state tax preparation   A parent or guardian who does not sign the child's return may be designated as the child's representative by the child or the person signing the return on the child's behalf. Free online state tax preparation Form 2848, Power of Attorney and Declaration of Representative, is used to designate a child's representative. Free online state tax preparation See Publication 947, Practice Before the IRS and Power of Attorney, for more information. Free online state tax preparation   If designated, a parent or guardian can receive information about the child's return but cannot legally bind the child to a tax liability unless authorized to do so by the law of the state in which the child lives. Free online state tax preparation IRS notice. Free online state tax preparation   If you or the child receives a notice from the IRS concerning the child's return or tax liability, you should immediately inform the IRS that the notice concerns a child. Free online state tax preparation The notice will show who to contact. Free online state tax preparation The IRS will try to resolve the matter with the parent(s) or guardian(s) of the child consistent with their authority. Free online state tax preparation Child's earnings. Free online state tax preparation   For federal income tax purposes, amounts a child earns by performing services are included in the gross income of the child and not the gross income of the parent. Free online state tax preparation This is true even if, under state law, the parent has the right to the earnings and may actually have received them. Free online state tax preparation If the child does not pay the tax due on this income, the parent may be liable for the tax. Free online state tax preparation Child's expenses. Free online state tax preparation   Deductions for payments that are made out of a child's earnings are the child's, even if the payments are made by the parent. Free online state tax preparation Example. Free online state tax preparation You made payments on your child's behalf that are deductible as a business expense and a charitable contribution. Free online state tax preparation You made the payments out of your child's earnings. Free online state tax preparation These items can be deducted only on the child's return. Free online state tax preparation Standard Deduction The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the larger of: $1,000, or The individual's earned income plus $350, but not more than the regular standard deduction (generally $6,100). Free online state tax preparation However, the standard deduction may be higher for a dependent who: Is 65 or older, or Is blind. Free online state tax preparation Certain dependents cannot claim any standard deduction. Free online state tax preparation See Standard Deduction of Zero , later. Free online state tax preparation Worksheet 1. Free online state tax preparation   Use Worksheet 1 to figure the dependent's standard deduction. Free online state tax preparation Worksheet 1. Free online state tax preparation Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse, if filing jointly) as a dependent. Free online state tax preparation If you were 65 or older and/or blind, check the correct number of boxes below. Free online state tax preparation Put the total number of boxes checked in box c and go to line 1. Free online state tax preparation a. Free online state tax preparation You 65 or older   Blind   b. Free online state tax preparation Your spouse, if claiming  spouse's exemption 65 or older   Blind   c. Free online state tax preparation Total boxes checked         1. Free online state tax preparation Enter your earned income (defined below) plus $350. Free online state tax preparation If none, enter -0-. Free online state tax preparation 1. Free online state tax preparation     2. Free online state tax preparation Minimum amount. Free online state tax preparation   2. Free online state tax preparation $1,000   3. Free online state tax preparation Compare lines 1 and 2. Free online state tax preparation Enter the larger of the two amounts here. Free online state tax preparation 3. Free online state tax preparation     4. Free online state tax preparation Enter on line 4 the amount shown below for your filing status. Free online state tax preparation       Single or Married filing separately—$6,100 Married filing jointly—$12,200 Head of household—$8,950 4. Free online state tax preparation     5. Free online state tax preparation Standard deduction. Free online state tax preparation         a. Free online state tax preparation Compare lines 3 and 4. Free online state tax preparation Enter the smaller amount here. Free online state tax preparation If under 65 and not blind, stop here. Free online state tax preparation This is your standard deduction. Free online state tax preparation Otherwise, go on to line 5b. Free online state tax preparation 5a. Free online state tax preparation     b. Free online state tax preparation If 65 or older or blind, multiply $1,500 ($1,200 if married) by the number in box c above. Free online state tax preparation Enter the result here. Free online state tax preparation 5b. Free online state tax preparation     c. Free online state tax preparation Add lines 5a and 5b. Free online state tax preparation This is your standard deduction for 2013. Free online state tax preparation 5c. Free online state tax preparation     Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Free online state tax preparation It also includes any amount received as a scholarship that you must include in income. Free online state tax preparation   Example 1. Free online state tax preparation Michael is single, age 15, and not blind. Free online state tax preparation His parents can claim him as a dependent on their tax return. Free online state tax preparation He has taxable interest income of $800 and wages of $150. Free online state tax preparation He enters $500 (his earned income plus $350) on line 1 of Worksheet 1. Free online state tax preparation On line 3, he enters $1,000, the larger of $500 or $1,000. Free online state tax preparation Michael enters $6,100 on line 4. Free online state tax preparation On line 5a, he enters $1,000, the smaller of $1,000 or $6,100. Free online state tax preparation His standard deduction is $1,000. Free online state tax preparation Example 2. Free online state tax preparation Judy, a full-time student, is single, age 22, and not blind. Free online state tax preparation Her parents can claim her as a dependent on their tax return. Free online state tax preparation She has dividend income of $275 and wages of $2,500. Free online state tax preparation She enters $2,850 (her earned income plus $350) on line 1 of Worksheet 1. Free online state tax preparation On line 3, she enters $2,850, the larger of $2,850 or $1,000. Free online state tax preparation She enters $6,100 on line 4. Free online state tax preparation On line 5a, she enters $2,850 (the smaller of $2,850 or $6,100) as her standard deduction. Free online state tax preparation Example 3. Free online state tax preparation Amy, who is single, is claimed as a dependent on her parents' tax return. Free online state tax preparation She is 18 years old and blind. Free online state tax preparation She has taxable interest income of $1,000 and wages of $2,000. Free online state tax preparation She enters $2,350 (her earned income plus $350) on line 1 of Worksheet 1. Free online state tax preparation She enters $2,350 (the larger of $2,350 or $1,000) on line 3, $6,100 on line 4, and $2,350 (the smaller of $2,350 or $6,100) on line 5a. Free online state tax preparation Because Amy is blind, she checks the box for blindness and enters “1” in box c at the top of Worksheet 1. Free online state tax preparation She enters $1,500 (the number in box c times $1,500) on line 5b. Free online state tax preparation Her standard deduction on line 5c is $3,850 ($2,350 + $1,500). Free online state tax preparation Standard Deduction of Zero The standard deduction for the following dependents is zero. Free online state tax preparation A married dependent filing a separate return whose spouse itemizes deductions. Free online state tax preparation A dependent who files a return for a period of less than 12 months due to a change in his or her annual accounting period. Free online state tax preparation A nonresident or dual-status alien dependent, unless the dependent is married to a U. Free online state tax preparation S. Free online state tax preparation citizen or resident alien at the end of the year and chooses to be treated as a U. Free online state tax preparation S. Free online state tax preparation resident for the year. Free online state tax preparation See Publication 519, U. Free online state tax preparation S. Free online state tax preparation Tax Guide for Aliens, for information on making this choice. Free online state tax preparation Example. Free online state tax preparation Jennifer, who is a dependent of her parents, is entitled to file a joint return with her husband. Free online state tax preparation However, her husband elects to file a separate return and itemize his deductions. Free online state tax preparation Because he itemizes, Jennifer's standard deduction on her return is zero. Free online state tax preparation She can, however, itemize any of her allowable deductions. Free online state tax preparation Dependent's Own Exemption A person who can be claimed as a dependent on another taxpayer's return cannot claim his or her own exemption. Free online state tax preparation This is true even if the other taxpayer does not actually claim the exemption. Free online state tax preparation Example. Free online state tax preparation James and Barbara can claim their child, Ben, as a dependent on their return. Free online state tax preparation Ben is a college student who works during the summer and must file a tax return. Free online state tax preparation Ben cannot claim his own exemption on his return. Free online state tax preparation This is true even if James and Barbara do not claim him as a dependent on their return. Free online state tax preparation Withholding From Wages Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. Free online state tax preparation If the employee claims exemption from withholding on Form W-4, the employer will not withhold federal income tax. Free online state tax preparation The exemption from withholding does not apply to social security and Medicare taxes. Free online state tax preparation Conditions for exemption from withholding. Free online state tax preparation   An employee can claim exemption from withholding for 2014 only if he or she meets both of the following conditions. Free online state tax preparation For 2013, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability. Free online state tax preparation For 2014, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability. Free online state tax preparation Dependents. Free online state tax preparation   An employee who is a dependent ordinarily cannot claim exemption from withholding if both of the following are true. Free online state tax preparation The employee's gross income will be more than $1,000, the minimum standard deduction for 2014. Free online state tax preparation The employee's unearned income will be more than $350. Free online state tax preparation Exceptions. Free online state tax preparation   An employee may be able to claim exemption from withholding even if the employee is a dependent, if the employee: Is age 65 or older, Is blind, or Will claim on his or her 2014 tax return: Adjustments to income, Tax credits, or Itemized deductions. Free online state tax preparation The above exceptions do not apply to supplemental wages greater than $1,000,000. Free online state tax preparation For more information, see Exemption From Withholding in chapter 1 of Publication 505. Free online state tax preparation Example. Free online state tax preparation Guy is 17 and a student. Free online state tax preparation During the summer he works part time at a grocery store. Free online state tax preparation He expects to earn about $1,200 this year. Free online state tax preparation He also worked at the store last summer and received a refund of all his withheld income tax because he did not have a tax liability. Free online state tax preparation The only other income he expects during the year is $375 interest on a savings account. Free online state tax preparation He expects that his parents will be able to claim him as a dependent on their tax return. Free online state tax preparation He is not blind and will not claim adjustments to income, itemized deductions, a higher standard deduction, or tax credits on his return. Free online state tax preparation Guy cannot claim exemption from withholding when he fills out Form W-4 because his parents will be able to claim him as a dependent, his gross income will be more than $1,000 (the minimum standard deduction amount) and his unearned income will be more than $350. Free online state tax preparation Claiming exemption from withholding. Free online state tax preparation    To claim exemption from withholding, an employee must enter “Exempt” in the space provided on Form W-4, line 7. Free online state tax preparation The employee must complete the rest of the form, as explained in the form instructions, and give it to his or her employer. Free online state tax preparation Renewing an exemption from withholding. Free online state tax preparation   An exemption from withholding is good for only one year. Free online state tax preparation An employee must file a new Form W-4 by February 15 each year to continue the exemption. Free online state tax preparation Part 2. Free online state tax preparation Tax on Unearned Income of Certain Children The two rules that follow may affect the tax on the unearned income of certain children. Free online state tax preparation If the child's interest and dividend income (including capital gain distributions) total less than $10,000, the child's parent may be able to choose to include that income on the parent's return rather than file a return for the child. Free online state tax preparation (See Parent's Election To Report Child's Interest and Dividends , later. Free online state tax preparation ) If the child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. Free online state tax preparation (See Tax for Certain Children Who Have Unearned Income , later. Free online state tax preparation ) For these rules, the term “child” includes a legally adopted child and a stepchild. Free online state tax preparation These rules apply whether or not the child is a dependent. Free online state tax preparation These rules do not apply if neither of the child's parents were living at the end of the year. Free online state tax preparation Which Parent's Return To Use If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the child's unearned income. Free online state tax preparation The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Certain Children Who Have Unearned Income . Free online state tax preparation Parents Who Do Not File a Joint Return For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax. Free online state tax preparation Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . Free online state tax preparation Parents are married. Free online state tax preparation   If the child's parents file separate returns, use the return of the parent with the greater taxable income. Free online state tax preparation Parents not living together. Free online state tax preparation   If the child's parents are married to each other but not living together, and the parent with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. Free online state tax preparation If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. Free online state tax preparation   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in Publication 501. Free online state tax preparation Parents are divorced. Free online state tax preparation   If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the custodial parent) has not remarried, use the return of the custodial parent. Free online state tax preparation Custodial parent remarried. Free online state tax preparation   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. Free online state tax preparation Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. Free online state tax preparation Do not use the return of the noncustodial parent. Free online state tax preparation   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. Free online state tax preparation If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. Free online state tax preparation Parents never married. Free online state tax preparation   If a child's parents have never been married to each other, but lived together all year, use the return of the parent with the greater taxable income. Free online state tax preparation If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. Free online state tax preparation Widowed parent remarried. Free online state tax preparation   If a widow or widower remarries, the new spouse is treated as the child's other parent. Free online state tax preparation The rules explained earlier under Custodial parent remarried apply. Free online state tax preparation Parent's Election To Report Child's Interest and Dividends You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. Free online state tax preparation If you do, your child will not have to file a return. Free online state tax preparation You can make this election only if all the following conditions are met. Free online state tax preparation Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. Free online state tax preparation Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). Free online state tax preparation The child's gross income was less than $10,000. Free online state tax preparation The child is required to file a return unless you make this election. Free online state tax preparation The child does not file a joint return for the year. Free online state tax preparation No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was applied to this year under your child's name and social security number. Free online state tax preparation No federal income tax was withheld from your child's income under the backup withholding rules. Free online state tax preparation You are the parent whose return must be used when applying the special tax rules for children. Free online state tax preparation (See Which Parent's Return To Use , earlier. Free online state tax preparation ) These conditions are also shown in Figure 1. Free online state tax preparation Certain January 1 birthdays. Free online state tax preparation   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. Free online state tax preparation You cannot make this election for such a child unless the child was a full-time student. Free online state tax preparation   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. Free online state tax preparation You cannot make this election for such a child. Free online state tax preparation How to make the election. Free online state tax preparation    Make the election by attaching Form 8814 to your Form 1040 or Form 1040NR. Free online state tax preparation (If you make this election, you cannot file Form 1040A or Form 1040EZ. Free online state tax preparation ) Attach a separate Form 8814 for each child for whom you make the election. Free online state tax preparation You can make the election for one or more children and not for others. Free online state tax preparation Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. Free online state tax preparation Rate may be higher. Free online state tax preparation   If your child received qualified dividends or capital gain distributions, you may pay up to $100 more tax if you make this election instead of filing a separate tax return for the child. Free online state tax preparation This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. Free online state tax preparation However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions. Free online state tax preparation Deductions you cannot take. Free online state tax preparation   By making the Form 8814 election, you cannot take any of the following deductions that the child would be entitled to on his or her return. Free online state tax preparation The additional standard deduction if the child is blind. Free online state tax preparation The deduction for a penalty on an early withdrawal of your child's savings. Free online state tax preparation Itemized deductions (such as your child's investment expenses or charitable contributions). Free online state tax preparation Figure 1. Free online state tax preparation Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. Free online state tax preparation Figure 1. Free online state tax preparation Can You Include Your Child's Income On Your Tax Return? Deductible investment interest. Free online state tax preparation   If you use Form 8814, your child's unearned income is considered your unearned income. Free online state tax preparation To figure the limit on your deductible investment interest, add the child's unearned income to yours. Free online state tax preparation However, if your child received qualified dividends, capital gain distributions, or Alaska Permanent Fund dividends, see chapter 3 of Publication 550 for information about how to figure the limit. Free online state tax preparation Alternative minimum tax. Free online state tax preparation    If your child received tax-exempt interest (or exempt-interest dividends paid by a regulated investment company) from certain private activity bonds, you must determine if that interest is a tax preference item for alternative minimum tax (AMT) purposes. Free online state tax preparation If it is, you must include it with your own tax preference items when figuring your AMT. Free online state tax preparation See Form 6251, Alternative Minimum Tax—Individuals, and its instructions for details. Free online state tax preparation Reduced deductions or credits. Free online state tax preparation   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return, including the following. Free online state tax preparation Deduction for contributions to a traditional individual retirement arrangement (IRA). Free online state tax preparation Deduction for student loan interest. Free online state tax preparation Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. Free online state tax preparation Credit for child and dependent care expenses. Free online state tax preparation Child tax credit. Free online state tax preparation Education tax credits. Free online state tax preparation Earned income credit. Free online state tax preparation Penalty for underpayment of estimated tax. Free online state tax preparation   If you make this election for 2013 and did not have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to a penalty. Free online state tax preparation If you plan to make this election for 2014, you may need to increase your federal income tax withholding or your estimated tax payments to avoid the penalty. Free online state tax preparation Get Publication 505 for more information. Free online state tax preparation Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. Free online state tax preparation Only the amount over $2,000 is added to your income. Free online state tax preparation The amount over $2,000 is shown on Form 8814, line 6. Free online state tax preparation Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. Free online state tax preparation Include the amount from Form 8814, line 12, on Form 1040 or Form 1040NR, line 21. Free online state tax preparation If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040 or Form 1040NR, line 21. Free online state tax preparation On the dotted line next to line 21, enter “Form 8814” and the total of the Form 8814, line 12 amounts. Free online state tax preparation Note. Free online state tax preparation The tax on the first $2,000 is figured on Form 8814, Part II. Free online state tax preparation See Figuring Additional Tax , later. Free online state tax preparation Qualified dividends. Free online state tax preparation   Enter on Form 8814, line 2a, any ordinary dividends your child received. Free online state tax preparation This amount may include qualified dividends. Free online state tax preparation Qualified dividends are those dividends reported on Form 1040, line 9b, or Form 1040NR, line 10b, and are eligible for lower tax rates that apply to a net capital gain. Free online state tax preparation For detailed information about qualified dividends, see Publication 550. Free online state tax preparation   If your child received qualified dividends, the amount of these dividends that is added to your income must be reported on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Free online state tax preparation You do not include these dividends on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. Free online state tax preparation   Enter the child's qualified dividends on Form 8814, line 2b. Free online state tax preparation But do not include this amount on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Free online state tax preparation Instead, include the amount from Form 8814, line 9, on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Free online state tax preparation (The amount on Form 8814, line 9, may be less than the amount on Form 8814, line 2b, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. Free online state tax preparation ) Capital gain distributions. Free online state tax preparation   Enter on Form 8814, line 3, any capital gain distributions your child received. Free online state tax preparation The amount of these distributions that is added to your income must be reported on Schedule D (Form 1040), line 13, or, if you are not required to file Schedule D, on Form 1040, line 13, or Form 1040NR, line 14. Free online state tax preparation You do not include it on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. Free online state tax preparation   Include the amount from Form 8814, line 10, on Schedule D, line 13; Form 1040, line 13; or Form 1040NR, line 14, whichever applies. Free online state tax preparation (The amount on Form 8814, line 10, may be less than the amount on Form 8814, line 3, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. Free online state tax preparation ) Collectibles (28% rate) gain. Free online state tax preparation    If any of the child's capital gain distributions are reported on Form 1099-DIV as collectibles (28% rate) gain, you must determine how much to also include on line 4 of the 28% Rate Gain Worksheet, in the instructions for Schedule D, line 18. Free online state tax preparation Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Free online state tax preparation The numerator is the part of the child's total capital gain distribution that is collectibles (28% rate) gain. Free online state tax preparation The denominator is the child's total capital gain distribution. Free online state tax preparation Enter the result on line 4 of the 28% Rate Gain Worksheet. Free online state tax preparation Unrecaptured section 1250 gain. Free online state tax preparation   If any of the child's capital gain distributions are reported on Form 1099-DIV as unrecaptured section 1250 gain, you must determine how much to include on line 11 of the Unrecaptured Section 1250 Gain Worksheet in the instructions for Schedule D, line 19. Free online state tax preparation Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Free online state tax preparation The numerator is the part of the child's total capital gain distribution that is unrecaptured section 1250 gain. Free online state tax preparation The denominator is the child's total capital gain distribution. Free online state tax preparation Enter the result on the Unrecaptured Section 1250 Gain Worksheet, line 11. Free online state tax preparation Section 1202 gain. Free online state tax preparation   If any of the child's capital gain distributions are reported as section 1202 gain (gain on qualified small business stock) on Form 1099-DIV, part or all of that gain may be eligible for the section 1202 exclusion. Free online state tax preparation (For information about the exclusion, see chapter 4 of Publication 550. Free online state tax preparation ) To figure that part, multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Free online state tax preparation The numerator is the part of the child's total capital gain distribution that is section 1202 gain. Free online state tax preparation The denominator is the child's total capital gain distribution. Free online state tax preparation Your section 1202 exclusion is generally 50% of the result, but may be subject to a limit. Free online state tax preparation In some cases, the exclusion is more than 50%. Free online state tax preparation See the instructions for Schedule D for details and information on how to report the exclusion amount. Free online state tax preparation Example. Free online state tax preparation Fred is 6 years old. Free online state tax preparation In 2013, he received dividend income of $2,100, which included $1,575 of ordinary dividends and a $525 capital gain distribution from a mutual fund. Free online state tax preparation (None of the distributions were reported on Form 1099-DIV as unrecaptured section 1250 gain, section 1202 gain, or collectibles (28% rate) gain. Free online state tax preparation ) All of the ordinary dividends are qualified dividends. Free online state tax preparation He has no other income and is not subject to backup withholding. Free online state tax preparation No estimated tax payments were made under his name and social security number. Free online state tax preparation Fred's parents elect to include Fred's income on their tax return instead of filing a return for him. Free online state tax preparation They figure the amount to report on Form 1040, lines 9a and 9b, the amount to report on their Schedule D, line 13, and the amount to report on Form 1040, line 21, as follows. Free online state tax preparation They leave lines 1a and 1b of Form 8814 blank because Fred does not have any interest income. Free online state tax preparation They enter his ordinary dividends of $1,575 on lines 2a and 2b because all of Fred's ordinary dividends are qualified dividends. Free online state tax preparation They enter the amount of Fred's capital gain distributions, $525, on line 3. Free online state tax preparation Next, they add the amounts on lines 1a, 2a, and 3 and enter the result, $2,100, on line 4. Free online state tax preparation They subtract the base amount on line 5, $2,000, from the amount on line 4, $2,100, and enter the result, $100, on line 6. Free online state tax preparation This is the total amount from Form 8814 to be reported on their return. Free online state tax preparation Next, they figure how much of this amount is qualified dividends and how much is capital gain distributions. Free online state tax preparation They divide the amount on line 2b, $1,575, by the amount on line 4, $2,100. Free online state tax preparation They enter the result, . Free online state tax preparation 75, on line 7. Free online state tax preparation They divide the amount on line 3, $525, by the amount on line 4, $2,100. Free online state tax preparation They enter the result, . Free online state tax preparation 25, on line 8. Free online state tax preparation They multiply the amount on line 6, $100, by the decimal on line 7, . Free online state tax preparation 75, and enter the result, $75, on line 9. Free online state tax preparation They multiply the amount on line 6, $100, by the decimal on line 8, . Free online state tax preparation 25, and enter the result, $25, on line 10. Free online state tax preparation They include the amount from line 9, $75, on lines 9a and 9b of their Form 1040 and enter “Form 8814 – $75” on the dotted lines next to lines 9a and 9b. Free online state tax preparation They include the amount from line 10, $25, on line 13 of their Schedule D (Form 1040) and enter “Form 8814 – $25” on the dotted line next to Schedule D, line 13. Free online state tax preparation They enter $100 ($75 + $25) on line 11 and -0- ($100 – $100) on line 12. Free online state tax preparation Because the amount on line 12 is -0-, they do not include any amount from Form 8814 on their Form 1040, line 21. Free online state tax preparation Figuring Additional Tax Use Form 8814, Part II, to figure the tax on the $2,000 of your child's interest and dividends that you do not include in your income. Free online state tax preparation This tax is added to the tax figured on your income. Free online state tax preparation This additional tax is the smaller of: 10% x (your child's gross income − $1,000), or $100. Free online state tax preparation Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44, or Form 1040NR, line 42. Free online state tax preparation Check box a on Form 1040, line 44, or Form 1040NR, line 42. Free online state tax preparation Tax for Certain Children Who Have Unearned Income If a child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. Free online state tax preparation If the parent does not or cannot choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. Free online state tax preparation Attach the completed form to the child's Form 1040, Form 1040A, or Form 1040NR. Free online state tax preparation When Form 8615 must be filed. Free online state tax preparation   Form 8615 must be filed for a child if all of the following statements are true. Free online state tax preparation The child's unearned income was more than $2,000. Free online state tax preparation The child is required to file a return for 2013. Free online state tax preparation The child either: Was under age 18 at the end of the year, Was age 18 at the end of the year and did not have earned income that was more than half of his or her support, or Was over age 18 and under age 24 at the end of the year, was a full-time student, and did not have earned income that was more than half of his or her support. Free online state tax preparation At least one of the child's parents was alive at the end of 2013. Free online state tax preparation The child does not file a joint return for 2013. Free online state tax preparation These conditions are also shown in Figure 2. Free online state tax preparation Certain January 1 birthdays. Free online state tax preparation   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. Free online state tax preparation IF a child was born on. Free online state tax preparation . Free online state tax preparation . Free online state tax preparation THEN, at the end of 2013, the child is considered to be. Free online state tax preparation . Free online state tax preparation . Free online state tax preparation January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. Free online state tax preparation The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. Free online state tax preparation  **This child meets condition 3 only if the child was a full-time student who did not have earned income that was more than half of the child's support. Free online state tax preparation  ***Do not use Form 8615 for this child. Free online state tax preparation Figure 2. Free online state tax preparation Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. Free online state tax preparation Figure 2. Free online state tax preparation Do You Have To Use Form 8615 To Figure Your Child's Tax? Providing Parental Information (Form 8615, Lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. Free online state tax preparation (If the parents filed a joint return, enter the name and social security number listed first on the joint return. Free online state tax preparation ) On line C, check the box for the parent's filing status. Free online state tax preparation See Which Parent's Return To Use, earlier, for information on which parent's return information must be used on Form 8615. Free online state tax preparation Parent with different tax year. Free online state tax preparation   If the parent and the child do not have the same tax year, complete Form 8615 using the information on the parent's return for the tax year that ends in the child's tax year. Free online state tax preparation Example. Free online state tax preparation Kimberly must use her mother's tax and taxable income to complete her Form 8615 for calendar year 2013 (January 1 – December 31). Free online state tax preparation Kimberly's mother files her tax return on a fiscal year basis (July 1 – June 30). Free online state tax preparation Kimberly must use the information on her mother's return for the tax year ending June 30, 2013, to complete her 2013 Form 8615. Free online state tax preparation Parent's return information not known timely. Free online state tax preparation   If the information needed from the parent's return is not known by the time the child's return is due (usually April 15), you can file the return using estimates. Free online state tax preparation   You can use any reasonable estimate. Free online state tax preparation This includes using information from last year's return. Free online state tax preparation If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. Free online state tax preparation   When you get the correct information, file an amended return on Form 1040X, Amended U. Free online state tax preparation S. Free online state tax preparation Individual Income Tax Return. Free online state tax preparation Extension of time to file. Free online state tax preparation   Instead of using estimates, you can get an automatic 6-month extension of time to file if, by the date your return is due, you file Form 4868, Application for Automatic Extension of Time To File U. Free online state tax preparation S. Free online state tax preparation Individual Income Tax Return. Free online state tax preparation See the instructions for Form 4868 for details. Free online state tax preparation    An extension of time to file is not an extension of time to pay. Free online state tax preparation You must make an accurate estimate of the tax for 2013. Free online state tax preparation If you do not pay the full amount due by the regular due date, the child will owe interest and may also be charged penalties. Free online state tax preparation See Form 4868 and its instructions. Free online state tax preparation Parent's return information not available. Free online state tax preparation   If a child cannot get the required information about his or her parent's tax return, the child (or the child's legal representative) can request the necessary information from the Internal Revenue Service (IRS). Free online state tax preparation How to request. Free online state tax preparation   After the end of the tax year, send a signed, written request for the information to the Internal Revenue Service Center where the parent's return will be filed. Free online state tax preparation (The IRS cannot process a request received before the end of the tax year. Free online state tax preparation )    You should also consider getting an extension of time to file the child's return, because there may be a delay in getting the requested information. Free online state tax preparation   The request must contain all of the following. Free online state tax preparation A statement that you are making the request to comply with section 1(g) of the Internal Revenue Code and that you have tried to get the information from the parent. Free online state tax preparation Proof of the child's age (for example, a copy of the child's birth certificate). Free online state tax preparation Evidence the child has more than $2,000 of unearned income (for example, a copy of the child's prior year tax return or copies of Forms 1099 for the current year). Free online state tax preparation The name, address, social security number (if known), and filing status (if known) of the parent whose information is to be shown on Form 8615. Free online state tax preparation    A child's legal representative making the request should include a copy of his or her Power of Attorney, such as Form 2848, or proof of legal guardianship. Free online state tax preparation Step 1. Free online state tax preparation Figuring the Child's Net Unearned Income (Form 8615, Part I) The first step in figuring a child's tax using Form 8615 is to figure the child's net unearned income. Free online state tax preparation To do that, use Form 8615, Part I. Free online state tax preparation Line 1 (Unearned Income) If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. Free online state tax preparation Adjusted gross income is shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Free online state tax preparation Form 1040EZ and Form 1040NR-EZ cannot be used if Form 8615 must be filed. Free online state tax preparation If the child had earned income, figure the amount to enter on Form 8615, line 1, by using the worksheet in the instructions for the form. Free online state tax preparation However, use the following worksheet if: the child has excluded any foreign earned income, deducted a loss from self-employment, or has a net operating loss from another year. Free online state tax preparation Alternate Worksheet for Form 8615, Line 1 A. Free online state tax preparation Enter the amount from the child's Form 1040, line 22, or Form 1040NR, line 23   B. Free online state tax preparation Enter the total of any net loss  from self-employment, any net operating loss deduction, any foreign earned income exclusion, and any foreign housing exclusion from the child's Form 1040 or Form 1040NR. Free online state tax preparation Enter this total as a positive number (greater than zero)   C. Free online state tax preparation Add line A and line B and  enter the total   D. Free online state tax preparation Enter the child's earned income plus any amount from the child's Form 1040, line 30, or the child's Form 1040NR, line 30     Generally, the child's earned income is the total of the amounts reported on Form 1040, lines 7, 12, and 18 (if line 12 or 18 is a loss, use zero) or Form 1040NR, lines 8, 13, and 19 (if line 13 or 19 is a loss, use zero)   E. Free online state tax preparation Subtract line D from line C. Free online state tax preparation Enter the result here and on Form 8615, line 1   Unearned income defined. Free online state tax preparation   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually performed. Free online state tax preparation It includes taxable interest, dividends, capital gains (including capital gain distributions), the taxable part of social security and pension payments, certain distributions from trusts, and unemployment compensation. Free online state tax preparation Unearned income includes amounts produced by assets the child obtained with earned income (such as interest on a savings account into which the child deposited wages). Free online state tax preparation Nontaxable income. Free online state tax preparation   For this purpose, unearned income includes only amounts the child must include in gross income. Free online state tax preparation Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. Free online state tax preparation Capital loss. Free online state tax preparation   A child's capital losses are taken into account in figuring the child's unearned income. Free online state tax preparation Capital losses are first applied against capital gains. Free online state tax preparation If the capital losses are more than the capital gains, the difference (up to $3,000) is subtracted from the child's interest, dividends, and other unearned income. Free online state tax preparation Any difference over $3,000 is carried to the next year. Free online state tax preparation Income from property received as a gift. Free online state tax preparation   A child's unearned income includes all income produced by property belonging to the child. Free online state tax preparation This is true even if the property was transferred to the child, regardless of when the property was transferred or purchased or who transferred it. Free online state tax preparation   A child's unearned income includes income produced by property given as a gift to the child. Free online state tax preparation This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. Free online state tax preparation Example. Free online state tax preparation Amanda Black, age 13, received the following income. Free online state tax preparation Dividends—$800 Wages—$2,100 Taxable interest—$1,200 Tax-exempt interest—$100 Capital gains—$300 Capital losses—($200) The dividends were qualified dividends on stock given to her by her grandparents. Free online state tax preparation Amanda's unearned income is $2,100. Free online state tax preparation This is the total of the dividends ($800), taxable interest ($1,200), and capital gains reduced by capital losses ($300 − $200 = $100). Free online state tax preparation Her wages are earned (not unearned) income because they are received for work actually performed. Free online state tax preparation Her tax-exempt interest is not included because it is nontaxable. Free online state tax preparation Trust income. Free online state tax preparation   If a child is the beneficiary of a trust, distributions of taxable interest, dividends, capital gains, and other unearned income from the trust are unearned income to the child. Free online state tax preparation   However, taxable distributions from a qualified disability trust are considered earned income for the purposes of completing Form 8615. Free online state tax preparation See the Form 8615 instructions for details. Free online state tax preparation Adjustment to income. Free online state tax preparation   In figuring the amount to enter on line 1, the child's unearned income is reduced by any penalty on the early withdrawal of savings. Free online state tax preparation Line 2 (Deductions) If the child does not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter $2,000 on line 2. Free online state tax preparation If the child itemizes deductions, enter on line 2 the larger of: $1,000 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29 (or Schedule A (Form 1040NR), line 15), that are directly connected with the production of the unearned income entered on line 1, or $2,000. Free online state tax preparation Directly connected. Free online state tax preparation   Itemized deductions are directly connected with the production of unearned income if they are for expenses paid to produce or collect taxable income or to manage, conserve, or maintain property held for producing income. Free online state tax preparation These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. Free online state tax preparation    These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). Free online state tax preparation Only the amount greater than 2% of the child's adjusted gross income can be deducted. Free online state tax preparation See Publication 529, Miscellaneous Deductions, for more information. Free online state tax preparation Example 1. Free online state tax preparation Roger, age 12, has unearned income of $8,000, no other income, no adjustments to income, and itemized deductions of $300 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with his unearned income. Free online state tax preparation His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. Free online state tax preparation Roger enters $2,000 on line 2 because that is more than the total of $1,000 plus his directly-connected itemized deductions of $300. Free online state tax preparation Example 2. Free online state tax preparation Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. Free online state tax preparation She has no other income. Free online state tax preparation She has itemized deductions of $1,050 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with the production of her unearned income. Free online state tax preparation Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). Free online state tax preparation The amount on line 2 is $2,050. Free online state tax preparation This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. Free online state tax preparation Line 3 Subtract line 2 from line 1 and enter the result on this line. Free online state tax preparation If zero or less, do not complete the rest of the form. Free online state tax preparation However, you must still attach Form 8615 to the child's tax return. Free online state tax preparation Figure the tax on the child's taxable income in the normal manner. Free online state tax preparation Line 4 (Child's Taxable Income) Enter on line 4 the child's taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. Free online state tax preparation Child files Form 2555 or 2555-EZ. Free online state tax preparation   If the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) is used to figure the child's tax. Free online state tax preparation Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the child's taxable income on Form 8615, line 4. Free online state tax preparation Line 5 (Net Unearned Income) A child's net unearned income cannot be more than his or her taxable income. Free online state tax preparation Enter on Form 8615, line 5, the smaller of line 3 or line 4. Free online state tax preparation This is the child's net unearned income. Free online state tax preparation If zero or less, do not complete the rest of the form. Free online state tax preparation However, you must still attach Form 8615 to the child's tax return. Free online state tax preparation Figure the tax on the child's taxable income in the normal manner. Free online state tax preparation Step 2. Free online state tax preparation Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) The next step in completing Form 8615 is to figure a tentative tax on the child's net unearned income at the parent's tax rate. Free online state tax preparation The tentative tax at the parent's tax rate is the difference between the tax on the parent's taxable income figured with the child's net unearned income (plus the net unearned income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it. Free online state tax preparation When figuring the tentative tax at the parent's tax rate on Form 8615, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net unearned income. Free online state tax preparation For example, do not refigure the medical expense deduction. Free online state tax preparation Figure the tentative tax on Form 8615, lines 6 through 13. Free online state tax preparation Line 6 (Parent's Taxable Income) Enter on line 6 the amount from the parent's Form 1040, line 43; Form 1040A, line 27; Form 1040EZ, line 6; Form 1040NR, line 41; or Form 1040NR-EZ, line 14. Free online state tax preparation If the parent's taxable income is zero or less, enter zero on line 6. Free online state tax preparation Parent files Form 2555 or 2555-EZ. Free online state tax preparation   If the parent files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet in the Form 1040 instructions is used to figure the parent's tax. Free online state tax preparation Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the parent's taxable income, on line 6 of Form 8615. Free online state tax preparation Line 7 (Net Unearned Income of Other Children) If the tax return information of the parent is also used on any other child's Form 8615, enter on line 7 the total of the amounts from line 5 of all the other children's Forms 8615. Free online state tax preparation Do not include the amount from line 5 of the Form 8615 being completed. Free online state tax preparation (The term “other child” means any other child whose Form 8615 uses the tax information of the parent identified on Lines A and B of Form 8615. Free online state tax preparation ) Example. Free online state tax preparation Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. Free online state tax preparation The children's net unearned income amounts on line 5 of their Forms 8615 are: Sharon—$800 Jerry—$600 Mike—$1,000 Line 7 of Sharon's Form 8615 will show $1,600, the total of the amounts on line 5 of Jerry's and Mike's Forms 8615. Free online state tax preparation Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). Free online state tax preparation Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). Free online state tax preparation Other children's information not available. Free online state tax preparation   If the net unearned income of the other children is not available when the return is due, either file the return using estimates or get an extension of time to file. Free online state tax preparation Estimates and extensions are discussed earlier under Providing Parental Information (Form 8615, Lines A–C) . Free online state tax preparation Line 8 (Parent's Taxable Income Plus Children's Net Unearned Income) Enter on this line the total of lines 5, 6, and 7. Free online state tax preparation You must determine the amount of net capital gain and qualified dividends included on this line before completing Form 8615, line 9. Free online state tax preparation Net capital gain. Free online state tax preparation   Net capital gain is the smaller of the gain, if any, on Schedule D (Form 1040), line 15, or the gain, if any, on Schedule D, line 16. Free online state tax preparation If Schedule D is not required, it is the amount on Form 1040, line 13; Form 1040A, line 10; or Form 1040NR, line 14. Free online state tax preparation Qualified dividends. Free online state tax preparation   Qualified dividends are those dividends reported on line 9b of Form 1040 or Form 1040A, or line 10b of Form 1040NR. Free online state tax preparation Net capital gain and qualified dividends on line 8. Free online state tax preparation   If neither the child, nor the parent, nor any other child has net capital gain, the net capital gain on line 8 is zero. Free online state tax preparation   If neither the child, nor the parent, nor any other child has qualified dividends, the amount of qualified dividends on line 8 is zero. Free online state tax preparation   If the child, parent, or any other child has net capital gain, figure the amount of net capital gain included on line 8 by adding together the net capital gain amounts included on lines 5, 6, and 7 of Form 8615. Free online state tax preparation   If the child, parent, or any other child has qualified dividends, figure the amount of qualified dividends included on line 8 by adding together the qualified dividend amounts included on lines 5, 6, and 7. Free online state tax preparation   Use the instructions for Form 8615, line 8, including the appropriate Line 5 Worksheet, to find these amounts. Free online state tax preparation See the instructions for Form 8615 for more details. Free online state tax preparation Note. Free online state tax preparation The amount of any net capital gain or qualified dividends is not separately reported on line 8. Free online state tax preparation It is  needed, however, when figuring the tax on line 9. Free online state tax preparation Line 9 (Tax on Parent's Taxable Income Plus Children's Net Unearned Income) Figure the tax on the amount on line 8 using the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet (in the Form 1040, 1040A, or 1040NR instructions), the Schedule D Tax Worksheet (in the Schedule D instructions), or Schedule J (Form 1040), as follows. Free online state tax preparation If line 8 does not include any net capital gain or qualified dividends, use the Tax Table or Tax Computation Worksheet to figure this tax. Free online state tax preparation But if Schedule J, Income Averaging for Farmers and Fishermen, is used to figure the tax on the parent's return, use it to figure this tax. Free online state tax preparation If line 8 includes any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. Free online state tax preparation For details, see the instructions for Form 8615, line 9. Free online state tax preparation However, if the child, parent, or any other child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. Free online state tax preparation But if Schedule J is used to figure the tax on the parent's return, use it to figure this tax. Free online state tax preparation Child files Form 2555 or 2555-EZ. Free online state tax preparation   If line 8 includes any net capital gain or qualified dividends and the child, or any other child filing Form 8615, also files Form 2555 or 2555-EZ, use Using the Schedule D Tax Worksheet for line 9 tax, next, to figure the line 9 tax. Free online state tax preparation Using the Schedule D Tax Worksheet for line 9 tax. Free online state tax preparation    Use the Schedule D Tax Worksheet (in the Schedule D instructions) to figure the line 9 tax on Form 8615 if the child, parent, or any other child has unrecaptured section 1250 gain or 28% rate gain. Free online state tax preparation If you must use the Schedule D Tax Worksheet, first complete any Schedule D and any actual Schedule D Tax Worksheet required for the child, parent, or any other child. Free online state tax preparation Then figure the line 9 tax using another Schedule D Tax Worksheet. Free online state tax preparation (Do not attach this Schedule D Tax Worksheet to the child's return. Free online state tax preparation )   Complete this Schedule D Tax Worksheet as follows. Free online state tax preparation On line 1, enter the amount from Form 8615, line 8. Free online state tax preparation On line 2, enter the qualified dividends included on Form 8615, line 8. Free online state tax preparation (See the earlier discussion for line 8. Free online state tax preparation ) On line 3, enter the total of the amounts, if any, on line 4g of all Forms 4952 filed by the child, parent, or any other child. Free online state tax preparation On line 4, enter the total of the amounts, if any, on line 4e of all Forms 4952 filed by the child, parent, or any other child. Free online state tax preparation If applicable, include instead the smaller amount entered on the dotted line next to line 4e. Free online state tax preparation On lines 5 and 6, follow the worksheet instructions. Free online state tax preparation On line 7, enter the net capital gain included on Form 8615, line 8. Free online state tax preparation (See the earlier discussion for line 8. Free online state tax preparation ) On lines 8 through 10, follow the worksheet instructions. Free online state tax preparation On line 11, enter zero if neither the child, nor the parent, nor any other child has unrecaptured section 1250 gain (Schedule D, line 19) or 28% rate gain (Schedule D, line 18). Free online state tax preparation Otherwise, enter the amount of unrecaptured section 1250 gain and 28% rate gain included in the net capital gain on line 8 of Form 8615. Free online state tax preparation Figure these amounts as explained later under Figuring unrecaptured section 1250 gain (line 11) and Figuring 28% rate gain (line 11). Free online state tax preparation If the Foreign Earned Income Tax Worksheet was used to figure the parent's tax or the tax of any child, go to step 10 below. Free online state tax preparation Otherwise, skip steps 10, 11, and 12 below, and go to step 13. Free online state tax preparation Determine whether there is a line 8 capital gain excess as follows. Free online state tax preparation Add the amounts on line 2 of all Foreign Earned Income Tax Worksheets completed by the parent or any child for whom Form 8615 is filed. Free online state tax preparation (But for each child do not add more than the excess, if any, of the amount on line 5 of the child's Form 8615 over the child's taxable income on Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. Free online state tax preparation ) Subtract (a) from the amount on line 1 of this Schedule D Tax Worksheet. Free online state tax preparation Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. Free online state tax preparation If the result is more than zero, that amount is the line 8 capital gain excess. Free online state tax preparation If the result is zero or less, there is no line 8 capital gain excess. Free online state tax preparation If there is no line 8 capital gain excess, skip step 12 below and go to step 13. Free online state tax preparation If there is a line 8 capital gain excess, complete a second Schedule D Tax Worksheet as instructed above and in step 13, but in its entirety and with the following additional modifications. Free online state tax preparation (These modifications are to be made only for purposes of filling out this additional Schedule D Tax Worksheet. Free online state tax preparation ) Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 8 capital gain excess. Free online state tax preparation Reduce the amount you would otherwise enter on line 6 (but not below zero) by any of the line 8 capital gain excess not used in (a) above. Free online state tax preparation If the child, parent, or any other child has 28% rate gain, reduce the amount you would otherwise enter on line 8 of Worksheet 1 for Line 11 of the Schedule D Tax Worksheet – 28% Rate Gain (Line 9 Tax), shown later, (but not below zero) by the line 8 capital gain excess, and refigure the amount on line 11 of this Schedule D Tax Worksheet. Free online state tax preparation If the child, parent, or any other child has unrecaptured section 1250 gain, reduce the amount you would otherwise enter on line 8 of Worksheet 2 for Line 11 of the Schedule D Tax Worksheet – Unrecaptured Section 1250 Gain (Line 9 Tax) (but not below zero) by the line 8 capital gain excess not used in 12(c), and refigure the amount on line 11 of this Schedule D Tax Worksheet. Free online state tax preparation Complete lines 12 through 45 following the worksheet instructions. Free online state tax preparation Use the parent's filing status to complete lines 15, 42, and 44. Free online state tax preparation Enter the amount from line 45 of this Schedule D Tax Worksheet on Form 8615, line 9, and check the box on that line