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Taxslayer Military

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Taxslayer Military

Taxslayer military 2. Taxslayer military   Accounting Periods and Methods Table of Contents Introduction Useful Items - You may want to see: Accounting Periods Accounting MethodsCash Method Accrual Method Combination Method Inventories Uniform Capitalization Rules Special Methods Change in Accounting Method Introduction You must figure your taxable income and file an income tax return for an annual accounting period called a tax year. Taxslayer military Also, you must consistently use an accounting method that clearly shows your income and expenses for the tax year. Taxslayer military Useful Items - You may want to see: Publication 538 Accounting Periods and Methods See chapter 12 for information about getting publications and forms. Taxslayer military Accounting Periods When preparing a statement of income and expenses (generally your income tax return), you must use your books and records for a specific interval of time called an accounting period. Taxslayer military The annual accounting period for your income tax return is called a tax year. Taxslayer military You can use one of the following tax years. Taxslayer military A calendar tax year. Taxslayer military A fiscal tax year. Taxslayer military Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year. Taxslayer military A required tax year is a tax year required under the Internal Revenue Code or the Income Tax Regulations. Taxslayer military Calendar tax year. Taxslayer military   A calendar tax year is 12 consecutive months beginning January 1 and ending December 31. Taxslayer military   You must adopt the calendar tax year if any of the following apply. Taxslayer military You do not keep books. Taxslayer military You have no annual accounting period. Taxslayer military Your present tax year does not qualify as a fiscal year. Taxslayer military Your use of the calendar tax year is required under the Internal Revenue Code or the Income Tax Regulations. Taxslayer military   If you filed your first income tax return using the calendar tax year and you later begin business as a sole proprietor, you must continue to use the calendar tax year unless you get IRS approval to change it or are otherwise allowed to change it without IRS approval. Taxslayer military For more information, see Change in tax year, later. Taxslayer military   If you adopt the calendar tax year, you must maintain your books and records and report your income and expenses for the period from January 1 through December 31 of each year. Taxslayer military Fiscal tax year. Taxslayer military   A fiscal tax year is 12 consecutive months ending on the last day of any month except December. Taxslayer military A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month. Taxslayer military   If you adopt a fiscal tax year, you must maintain your books and records and report your income and expenses using the same tax year. Taxslayer military   For more information on a fiscal tax year, including a 52-53-week tax year, see Publication 538. Taxslayer military Change in tax year. Taxslayer military   Generally, you must file Form 1128, Application To Adopt, Change, or Retain a Tax Year, to request IRS approval to change your tax year. Taxslayer military See the Instructions for Form 1128 for exceptions. Taxslayer military If you qualify for an automatic approval request, a user fee is not required. Taxslayer military If you do not qualify for automatic approval, a ruling must be requested. Taxslayer military See the instructions for Form 1128 for information about user fees if you are requesting a ruling. Taxslayer military Accounting Methods An accounting method is a set of rules used to determine when and how income and expenses are reported. Taxslayer military Your accounting method includes not only the overall method of accounting you use, but also the accounting treatment you use for any material item. Taxslayer military You choose an accounting method for your business when you file your first income tax return that includes a Schedule C for the business. Taxslayer military After that, if you want to change your accounting method, you must generally get IRS approval. Taxslayer military See Change in Accounting Method, later. Taxslayer military Kinds of methods. Taxslayer military   Generally, you can use any of the following accounting methods. Taxslayer military Cash method. Taxslayer military An accrual method. Taxslayer military Special methods of accounting for certain items of income and expenses. Taxslayer military Combination method using elements of two or more of the above. Taxslayer military You must use the same accounting method to figure your taxable income and to keep your books. Taxslayer military Also, you must use an accounting method that clearly shows your income. Taxslayer military Business and personal items. Taxslayer military   You can account for business and personal items under different accounting methods. Taxslayer military For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. Taxslayer military Two or more businesses. Taxslayer military   If you have two or more separate and distinct businesses, you can use a different accounting method for each if the method clearly reflects the income of each business. Taxslayer military They are separate and distinct only if you maintain complete and separate books and records for each business. Taxslayer military Cash Method Most individuals and many sole proprietors with no inventory use the cash method because they find it easier to keep cash method records. Taxslayer military However, if an inventory is necessary to account for your income, you must generally use an accrual method of accounting for sales and purchases. Taxslayer military For more information, see Inventories, later. Taxslayer military Income Under the cash method, include in your gross income all items of income you actually or constructively receive during your tax year. Taxslayer military If you receive property or services, you must include their fair market value in income. Taxslayer military Example. Taxslayer military On December 30, 2012, Mrs. Taxslayer military Sycamore sent you a check for interior decorating services you provided to her. Taxslayer military You received the check on January 2, 2013. Taxslayer military You must include the amount of the check in income for 2013. Taxslayer military Constructive receipt. Taxslayer military   You have constructive receipt of income when an amount is credited to your account or made available to you without restriction. Taxslayer military You do not need to have possession of it. Taxslayer military If you authorize someone to be your agent and receive income for you, you are treated as having received it when your agent received it. Taxslayer military Example. Taxslayer military Interest is credited to your bank account in December 2013. Taxslayer military You do not withdraw it or enter it into your passbook until 2014. Taxslayer military You must include it in your gross income for 2013. Taxslayer military Delaying receipt of income. Taxslayer military   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. Taxslayer military You must report the income in the year the property is received or made available to you without restriction. Taxslayer military Example. Taxslayer military Frances Jones, a service contractor, was entitled to receive a $10,000 payment on a contract in December 2013. Taxslayer military She was told in December that her payment was available. Taxslayer military At her request, she was not paid until January 2014. Taxslayer military She must include this payment in her 2013 income because it was constructively received in 2013. Taxslayer military Checks. Taxslayer military   Receipt of a valid check by the end of the tax year is constructive receipt of income in that year, even if you cannot cash or deposit the check until the following year. Taxslayer military Example. Taxslayer military Dr. Taxslayer military Redd received a check for $500 on December 31, 2013, from a patient. Taxslayer military She could not deposit the check in her business account until January 2, 2014. Taxslayer military She must include this fee in her income for 2013. Taxslayer military Debts paid by another person or canceled. Taxslayer military   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. Taxslayer military If you receive income in this way, you constructively receive the income when the debt is canceled or paid. Taxslayer military For more information, see Canceled Debt under Kinds of Income in chapter 5. Taxslayer military Repayment of income. Taxslayer military   If you include an amount in income and in a later year you have to repay all or part of it, you can usually deduct the repayment in the year in which you make it. Taxslayer military If the amount you repay is over $3,000, a special rule applies. Taxslayer military For details about the special rule, see Repayments in chapter 11 of Publication 535, Business Expenses. Taxslayer military Expenses Under the cash method, you generally deduct expenses in the tax year in which you actually pay them. Taxslayer military This includes business expenses for which you contest liability. Taxslayer military However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained later under Uniform Capitalization Rules. Taxslayer military Expenses paid in advance. Taxslayer military   You can deduct an expense you pay in advance only in the year to which it applies. Taxslayer military Example. Taxslayer military You are a calendar year taxpayer and you pay $1,000 in 2013 for a business insurance policy effective for one year, beginning July 1. Taxslayer military You can deduct $500 in 2013 and $500 in 2014. Taxslayer military Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. Taxslayer military The purpose of an accrual method of accounting is to match income and expenses in the correct year. Taxslayer military Income—General Rule Under an accrual method, you generally include an amount in your gross income for the tax year in which all events that fix your right to receive the income have occurred and you can determine the amount with reasonable accuracy. Taxslayer military Example. Taxslayer military You are a calendar year accrual method taxpayer. Taxslayer military You sold a computer on December 28, 2013. Taxslayer military You billed the customer in the first week of January 2014, but you did not receive payment until February 2014. Taxslayer military You must include the amount received for the computer in your 2013 income. Taxslayer military Income—Special Rules The following are special rules that apply to advance payments, estimating income, and changing a payment schedule for services. Taxslayer military Estimated income. Taxslayer military   If you include a reasonably estimated amount in gross income, and later determine the exact amount is different, take the difference into account in the tax year in which you make the determination. Taxslayer military Change in payment schedule for services. Taxslayer military   If you perform services for a basic rate specified in a contract, you must accrue the income at the basic rate, even if you agree to receive payments at a lower rate until you complete the services and then receive the difference. Taxslayer military Advance payments for services. Taxslayer military   Generally, you report an advance payment for services to be performed in a later tax year as income in the year you receive the payment. Taxslayer military However, if you receive an advance payment for services you agree to perform by the end of the next tax year, you can elect to postpone including the advance payment in income until the next tax year. Taxslayer military However, you cannot postpone including any payment beyond that tax year. Taxslayer military   For more information, see Advance Payment for Services under Accrual Method in Publication 538. Taxslayer military That publication also explains special rules for reporting the following types of income. Taxslayer military Advance payments for service agreements. Taxslayer military Prepaid rent. Taxslayer military Advance payments for sales. Taxslayer military   Special rules apply to including income from advance payments on agreements for future sales or other dispositions of goods you hold primarily for sale to your customers in the ordinary course of your business. Taxslayer military If the advance payments are for contracts involving both the sale and service of goods, it may be necessary to treat them as two agreements. Taxslayer military An agreement includes a gift certificate that can be redeemed for goods. Taxslayer military Treat amounts that are due and payable as amounts you received. Taxslayer military   You generally include an advance payment in income for the tax year in which you receive it. Taxslayer military However, you can use an alternative method. Taxslayer military For information about the alternative method, see Publication 538. Taxslayer military Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both the following apply. Taxslayer military The all-events test has been met. Taxslayer military The test has been met when: All events have occurred that fix the fact of liability, and The liability can be determined with reasonable accuracy. Taxslayer military Economic performance has occurred. Taxslayer military Economic performance. Taxslayer military   You generally cannot deduct or capitalize a business expense until economic performance occurs. Taxslayer military If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. Taxslayer military If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. Taxslayer military An exception allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. Taxslayer military For more information on economic performance, see Economic Performance under Accrual Method in Publication 538. Taxslayer military Example. Taxslayer military You are a calendar year taxpayer and use an accrual method of accounting. Taxslayer military You buy office supplies in December 2013. Taxslayer military You receive the supplies and the bill in December, but you pay the bill in January 2014. Taxslayer military You can deduct the expense in 2013 because all events that fix the fact of liability have occurred, the amount of the liability could be reasonably determined, and economic performance occurred in that year. Taxslayer military Your office supplies may qualify as a recurring expense. Taxslayer military In that case, you can deduct them in 2013 even if the supplies are not delivered until 2014 (when economic performance occurs). Taxslayer military Keeping inventories. Taxslayer military   When the production, purchase, or sale of merchandise is an income-producing factor in your business, you must generally take inventories into account at the beginning and the end of your tax year. Taxslayer military If you must account for an inventory, you must generally use an accrual method of accounting for your purchases and sales. Taxslayer military For more information, see Inventories , later. Taxslayer military Special rule for related persons. Taxslayer military   You cannot deduct business expenses and interest owed to a related person who uses the cash method of accounting until you make the payment and the corresponding amount is includible in the related person's gross income. Taxslayer military Determine the relationship, for this rule, as of the end of the tax year for which the expense or interest would otherwise be deductible. Taxslayer military If a deduction is not allowed under this rule, the rule will continue to apply even if your relationship with the person ends before the expense or interest is includible in the gross income of that person. Taxslayer military   Related persons include members of your immediate family, including only brothers and sisters (either whole or half), your spouse, ancestors, and lineal descendants. Taxslayer military For a list of other related persons, see section 267 of the Internal Revenue Code. Taxslayer military Combination Method You can generally use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. Taxslayer military However, the following restrictions apply. Taxslayer military If an inventory is necessary to account for your income, you must generally use an accrual method for purchases and sales. Taxslayer military (See, however, Inventories, later. Taxslayer military ) You can use the cash method for all other items of income and expenses. Taxslayer military If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. Taxslayer military If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. Taxslayer military If you use a combination method that includes the cash method, treat that combination method as the cash method. Taxslayer military Inventories Generally, if you produce, purchase, or sell merchandise in your business, you must keep an inventory and use the accrual method for purchases and sales of merchandise. Taxslayer military However, the following taxpayers can use the cash method of accounting even if they produce, purchase, or sell merchandise. Taxslayer military These taxpayers can also account for inventoriable items as materials and supplies that are not incidental (discussed later). Taxslayer military A qualifying taxpayer under Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. Taxslayer military A qualifying small business taxpayer under Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. Taxslayer military Qualifying taxpayer. Taxslayer military   You are a qualifying taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 17, 1998, is $1 million or less. Taxslayer military (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing by 3. Taxslayer military ) Your business is not a tax shelter, as defined under section 448(d)(3) of the Internal Revenue Code. Taxslayer military Qualifying small business taxpayer. Taxslayer military   You are a qualifying small business taxpayer if: Your average annual gross receipts for each prior tax year ending on or after December 31, 2000, is more than $1 million but not more than $10 million. Taxslayer military (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing the total by 3. Taxslayer military ) You are not prohibited from using the cash method under section 448 of the Internal Revenue Code. Taxslayer military Your principal business activity is an eligible business (described in Publication 538 and Revenue Procedure 2002-28). Taxslayer military Business not owned or not in existence for 3 years. Taxslayer military   If you did not own your business for all of the 3-tax-year period used in figuring your average annual gross receipts, include the period of any predecessor. Taxslayer military If your business has not been in existence for the 3-tax-year period, base your average on the period it has existed including any short tax years, annualizing the short tax year's gross receipts. Taxslayer military Materials and supplies that are not incidental. Taxslayer military   If you account for inventoriable items as materials and supplies that are not incidental, you will deduct the cost of the items you would otherwise include in inventory in the year you sell the items, or the year you pay for them, whichever is later. Taxslayer military If you are a producer, you can use any reasonable method to estimate the raw material in your work in process and finished goods on hand at the end of the year to determine the raw material used to produce finished goods that were sold during the year. Taxslayer military Changing accounting method. Taxslayer military   If you are a qualifying taxpayer or qualifying small business taxpayer and want to change to the cash method or to account for inventoriable items as non-incidental materials and supplies, you must file Form 3115, Application for Change in Accounting Method. Taxslayer military See Change in Accounting Method, later. Taxslayer military More information. Taxslayer military    For more information about the qualifying taxpayer exception, see Revenue Procedure 2001-10 in Internal Revenue Bulletin 2001-2. Taxslayer military For more information about the qualifying small business taxpayer exception, see Revenue Procedure 2002-28 in Internal Revenue Bulletin 2002-18. Taxslayer military Items included in inventory. Taxslayer military   If you are required to account for inventories, include the following items when accounting for your inventory. Taxslayer military Merchandise or stock in trade. Taxslayer military Raw materials. Taxslayer military Work in process. Taxslayer military Finished products. Taxslayer military Supplies that physically become a part of the item intended for sale. Taxslayer military Valuing inventory. Taxslayer military   You must value your inventory at the beginning and end of each tax year to determine your cost of goods sold (Schedule C, line 42). Taxslayer military To determine the value of your inventory, you need a method for identifying the items in your inventory and a method for valuing these items. Taxslayer military   Inventory valuation rules cannot be the same for all kinds of businesses. Taxslayer military The method you use to value your inventory must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. Taxslayer military Your inventory practices must be consistent from year to year. Taxslayer military More information. Taxslayer military   For more information about inventories, see Publication 538. Taxslayer military Uniform Capitalization Rules Under the uniform capitalization rules, you must capitalize the direct costs and part of the indirect costs for production or resale activities. Taxslayer military Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. Taxslayer military You recover the costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Taxslayer military Activities subject to the uniform capitalization rules. Taxslayer military   You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. Taxslayer military Produce real or tangible personal property. Taxslayer military For this purpose, tangible personal property includes a film, sound recording, video tape, book, or similar property. Taxslayer military Acquire property for resale. Taxslayer military Exceptions. Taxslayer military   These rules do not apply to the following property. Taxslayer military Personal property you acquire for resale if your average annual gross receipts are $10 million or less. Taxslayer military Property you produce if you meet either of the following conditions. Taxslayer military Your indirect costs of producing the property are $200,000 or less. Taxslayer military You use the cash method of accounting and do not account for inventories. Taxslayer military For more information, see Inventories, earlier. Taxslayer military Special Methods There are special methods of accounting for certain items of income or expense. Taxslayer military These include the following. Taxslayer military Amortization, discussed in chapter 8 of Publication 535, Business Expenses. Taxslayer military Bad debts, discussed in chapter 10 of Publication 535. Taxslayer military Depletion, discussed in chapter 9 of Publication 535. Taxslayer military Depreciation, discussed in Publication 946, How To Depreciate Property. Taxslayer military Installment sales, discussed in Publication 537, Installment Sales. Taxslayer military Change in Accounting Method Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. Taxslayer military A change in your accounting method includes a change in: Your overall method, such as from cash to an accrual method, and Your treatment of any material item. Taxslayer military To get approval, you must file Form 3115, Application for Change in Accounting Method. Taxslayer military You can get IRS approval to change an accounting method under either the automatic change procedures or the advance consent request procedures. Taxslayer military You may have to pay a user fee. Taxslayer military For more information, see the form instructions. Taxslayer military Automatic change procedures. Taxslayer military   Certain taxpayers can presume to have IRS approval to change their method of accounting. Taxslayer military The approval is granted for the tax year for which the taxpayer requests a change (year of change), if the taxpayer complies with the provisions of the automatic change procedures. Taxslayer military No user fee is required for an application filed under an automatic change procedure generally covered in Revenue Procedure 2002-9. Taxslayer military   Generally, you must use Form 3115 to request an automatic change. Taxslayer military For more information, see the Instructions for Form 3115. Taxslayer military Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Arkansas Office of the Attorney General

Website: Arkansas Office of the Attorney General http://www.gotyourbackarkansas.org

Address: Arkansas Office of the Attorney General
Consumer Protection Division
323 Center St., Suite 200
Little Rock, AR 72201

Phone Number: 501-682-2341

Toll-free: 1-800-482-8982 (Consumer Hotline)

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

State Bank Department

Website: State Bank Department

Address: State Bank Department
400 Hardin Rd., Suite 100
Little Rock, AR 72211

Phone Number: 501-324-9019

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Insurance Department

Website: Insurance Department

Address: Insurance Department
Consumer Services Division
1200 W. Third St.
Little Rock, AR 72201-1904

Phone Number: 501-371-2640

Toll-free: 1-800-852-5494

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Securities Department

Website: Securities Department

Address: Securities Department
Heritage West Building, Suite 300
201 E. Markham St.
Little Rock, AR 72201-1692

Phone Number: 501-324-9260

Toll-free: 1-800-981-4429

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Public Service Commission

Website: Public Service Commission

Address: Public Service Commission
Consumer Services Division
PO Box 400
Little Rock, AR 72203-0400

Phone Number: 501-682-1718

Toll-free: 1-800-482-1164 (AR)

TTY: 1-800-682-2698

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The Taxslayer Military

Taxslayer military Publication 929 - Main Content Table of Contents Part 1. Taxslayer military 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. Taxslayer military Designated as representative. Taxslayer military IRS notice. Taxslayer military Standard DeductionStandard Deduction of Zero Dependent's Own Exemption Withholding From WagesExceptions. Taxslayer military Part 2. Taxslayer military 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. Taxslayer military Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. Taxslayer military Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. Taxslayer military Figuring the Child's Tax (Form 8615, Part III) Alternative Minimum Tax Illustrated Example Part 1. Taxslayer military 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. Taxslayer military 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. Taxslayer military 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. Taxslayer military See Other Filing Requirements, later. Taxslayer military The following sections apply to dependents with: Earned income only, Unearned income only, and Both earned and unearned income. Taxslayer military  To find out whether a dependent must file, read the section that applies, or use Table 1. Taxslayer military 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. Taxslayer military 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). Taxslayer military Example. Taxslayer military William is 16. Taxslayer military His mother claims an exemption for him on her income tax return. Taxslayer military He worked part time on weekends during the school year and full time during the summer. Taxslayer military He earned $7,000 in wages. Taxslayer military He did not have any unearned income. Taxslayer military He must file a tax return because he has earned income only and his gross income is more than $6,100. Taxslayer military If he is blind, he does not have to file a return because his gross income is not more than $7,600. Taxslayer military 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. Taxslayer military 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). Taxslayer military Example. Taxslayer military Sarah is 18 and single. Taxslayer military Her parents can claim an exemption for her on their income tax return. Taxslayer military She received $1,970 of taxable interest and dividend income. Taxslayer military She did not work during the year. Taxslayer military She must file a tax return because she has unearned income only and her gross income is more than $1,000. Taxslayer military 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. Taxslayer military Election to report child's unearned income on parent's return. Taxslayer military   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. Taxslayer military See Parent's Election To Report Child's Interest and Dividends in Part 2. Taxslayer military If the parent makes this election, the child does not have to file a return. Taxslayer military 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. Taxslayer military Filing Requirement Worksheet for Most Dependents 1. Taxslayer military Enter dependent's earned income plus $350     2. Taxslayer military Minimum amount   $1,000 3. Taxslayer military Compare lines 1 and 2. Taxslayer military Enter the larger amount     4. Taxslayer military Maximum amount   6,100 5. Taxslayer military Compare lines 3 and 4. Taxslayer military Enter the smaller amount     6. Taxslayer military Enter the dependent's gross income. Taxslayer military If line 6 is more than line 5, the dependent must file an income tax return. Taxslayer military 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. Taxslayer military       Table 1. Taxslayer military 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. Taxslayer military   See the definitions of “dependent,”“earned income,”“unearned income,” and “gross income” in the Glossary. Taxslayer military   Single dependents—Were you either age 65 or older or blind?     No. Taxslayer military You must file a return if any of the following apply. Taxslayer military       Your unearned income was over $1,000. Taxslayer military Your earned income was over $6,100. Taxslayer military Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. Taxslayer military         Yes. Taxslayer military You must file a return if any of the following apply. Taxslayer military     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). Taxslayer military       Married dependents—Were you either age 65 or older or blind?     No. Taxslayer military You must file a return if any of the following apply. Taxslayer military       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Taxslayer military Your unearned income was over $1,000. Taxslayer military Your earned income was over $6,100. Taxslayer military Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. Taxslayer military       Yes. Taxslayer military You must file a return if any of the following apply. Taxslayer military       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. Taxslayer military 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). Taxslayer military       Example 1. Taxslayer military Joe is 20, single, not blind, and a full-time college student. Taxslayer military He does not provide more than half of his own support, and his parents claim an exemption for him on their income tax return. Taxslayer military He received $200 taxable interest income and earned $2,750 from a part-time job. Taxslayer military 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). Taxslayer military Filled-in Example 1 Filing Requirement Worksheet  for Most Dependents 1. Taxslayer military Enter dependent's earned income plus $350   $ 3,100 2. Taxslayer military Minimum amount   1,000 3. Taxslayer military Compare lines 1 and 2. Taxslayer military Enter the larger amount   3,100 4. Taxslayer military Maximum amount   6,100 5. Taxslayer military Compare lines 3 and 4. Taxslayer military Enter the smaller amount   3,100 6. Taxslayer military Enter the dependent's gross income. Taxslayer military If line 6 is more than line 5, the dependent must file an income tax return. Taxslayer military 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. Taxslayer military   $ 2,950   Example 2. Taxslayer military The facts are the same as in Example 1 except that Joe had $600 taxable interest income. Taxslayer military 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). Taxslayer military Filled-in Example 2 Filing Requirement Worksheet for Most Dependents 1. Taxslayer military Enter dependent's earned income plus $350   $ 3,100 2. Taxslayer military Minimum amount   1,000 3. Taxslayer military Compare lines 1 and 2. Taxslayer military Enter the larger amount   3,100 4. Taxslayer military Maximum amount   6,100 5. Taxslayer military Compare lines 3 and 4. Taxslayer military Enter the smaller amount   3,100 6. Taxslayer military Enter the dependent's gross income. Taxslayer military If line 6 is more than line 5, the dependent must file an income tax return. Taxslayer military 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. Taxslayer military   $ 3,350   Age 65 or older or blind. Taxslayer military 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. Taxslayer military Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. Taxslayer military Enter dependent's earned income plus $350     2. Taxslayer military Minimum amount   $1,000 3. Taxslayer military Compare lines 1 and 2. Taxslayer military Enter the larger amount     4. Taxslayer military Maximum amount   6,100 5. Taxslayer military Compare lines 3 and 4. Taxslayer military Enter the smaller amount     6. Taxslayer military 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. Taxslayer military Add lines 5 and 6. Taxslayer military Enter the total     8. Taxslayer military Enter the dependent's gross income. Taxslayer military If line 8 is more than line 7, the dependent must file an income tax return. Taxslayer military 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. Taxslayer military The facts are the same as in Example 2 except that Joe is also blind. Taxslayer military 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). Taxslayer military   Filled-in Example 3 Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. Taxslayer military Enter dependent's earned income plus $350   $3,100 2. Taxslayer military Minimum amount   1,000 3. Taxslayer military Compare lines 1 and 2. Taxslayer military Enter the larger amount   3,100 4. Taxslayer military Maximum amount   6,100 5. Taxslayer military Compare lines 3 and 4. Taxslayer military Enter the smaller amount   3,100 6. Taxslayer military 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. Taxslayer military Add lines 5 and 6. Taxslayer military Enter the total   4,600 8. Taxslayer military Enter the dependent's gross income. Taxslayer military If line 8 is more than line 7, the dependent must file an income tax return. Taxslayer military 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. Taxslayer military 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. Taxslayer military But if the dependent is filing a return only because of this tax, the dependent can file Form 5329 by itself. Taxslayer military A dependent must also file a tax return if he or she: Had wages of $108. Taxslayer military 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. Taxslayer military Spouse itemizes. Taxslayer military   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). Taxslayer military 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. Taxslayer military Income tax was withheld from his or her income. Taxslayer military He or she qualifies for the earned income credit, additional child tax credit, health coverage tax credit, or refundable American opportunity education credit. Taxslayer military See the tax return instructions to find out who qualifies for these credits. Taxslayer military  By filing a return, the dependent can get a refund. Taxslayer military 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. Taxslayer military 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. Taxslayer military Signing the child's return. Taxslayer military   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. Taxslayer military ” Authority of parent or guardian. Taxslayer military   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. Taxslayer military   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. Taxslayer military 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. Taxslayer military Third party designee. Taxslayer military   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. Taxslayer military 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. Taxslayer military   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. Taxslayer military 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. Taxslayer military See the return instructions for more information. Taxslayer military Designated as representative. Taxslayer military   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. Taxslayer military Form 2848, Power of Attorney and Declaration of Representative, is used to designate a child's representative. Taxslayer military See Publication 947, Practice Before the IRS and Power of Attorney, for more information. Taxslayer military   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. Taxslayer military IRS notice. Taxslayer military   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. Taxslayer military The notice will show who to contact. Taxslayer military The IRS will try to resolve the matter with the parent(s) or guardian(s) of the child consistent with their authority. Taxslayer military Child's earnings. Taxslayer military   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. Taxslayer military This is true even if, under state law, the parent has the right to the earnings and may actually have received them. Taxslayer military If the child does not pay the tax due on this income, the parent may be liable for the tax. Taxslayer military Child's expenses. Taxslayer military   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. Taxslayer military Example. Taxslayer military You made payments on your child's behalf that are deductible as a business expense and a charitable contribution. Taxslayer military You made the payments out of your child's earnings. Taxslayer military These items can be deducted only on the child's return. Taxslayer military 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). Taxslayer military However, the standard deduction may be higher for a dependent who: Is 65 or older, or Is blind. Taxslayer military Certain dependents cannot claim any standard deduction. Taxslayer military See Standard Deduction of Zero , later. Taxslayer military Worksheet 1. Taxslayer military   Use Worksheet 1 to figure the dependent's standard deduction. Taxslayer military Worksheet 1. Taxslayer military Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse, if filing jointly) as a dependent. Taxslayer military If you were 65 or older and/or blind, check the correct number of boxes below. Taxslayer military Put the total number of boxes checked in box c and go to line 1. Taxslayer military a. Taxslayer military You 65 or older   Blind   b. Taxslayer military Your spouse, if claiming  spouse's exemption 65 or older   Blind   c. Taxslayer military Total boxes checked         1. Taxslayer military Enter your earned income (defined below) plus $350. Taxslayer military If none, enter -0-. Taxslayer military 1. Taxslayer military     2. Taxslayer military Minimum amount. Taxslayer military   2. Taxslayer military $1,000   3. Taxslayer military Compare lines 1 and 2. Taxslayer military Enter the larger of the two amounts here. Taxslayer military 3. Taxslayer military     4. Taxslayer military Enter on line 4 the amount shown below for your filing status. Taxslayer military       Single or Married filing separately—$6,100 Married filing jointly—$12,200 Head of household—$8,950 4. Taxslayer military     5. Taxslayer military Standard deduction. Taxslayer military         a. Taxslayer military Compare lines 3 and 4. Taxslayer military Enter the smaller amount here. Taxslayer military If under 65 and not blind, stop here. Taxslayer military This is your standard deduction. Taxslayer military Otherwise, go on to line 5b. Taxslayer military 5a. Taxslayer military     b. Taxslayer military If 65 or older or blind, multiply $1,500 ($1,200 if married) by the number in box c above. Taxslayer military Enter the result here. Taxslayer military 5b. Taxslayer military     c. Taxslayer military Add lines 5a and 5b. Taxslayer military This is your standard deduction for 2013. Taxslayer military 5c. Taxslayer military     Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Taxslayer military It also includes any amount received as a scholarship that you must include in income. Taxslayer military   Example 1. Taxslayer military Michael is single, age 15, and not blind. Taxslayer military His parents can claim him as a dependent on their tax return. Taxslayer military He has taxable interest income of $800 and wages of $150. Taxslayer military He enters $500 (his earned income plus $350) on line 1 of Worksheet 1. Taxslayer military On line 3, he enters $1,000, the larger of $500 or $1,000. Taxslayer military Michael enters $6,100 on line 4. Taxslayer military On line 5a, he enters $1,000, the smaller of $1,000 or $6,100. Taxslayer military His standard deduction is $1,000. Taxslayer military Example 2. Taxslayer military Judy, a full-time student, is single, age 22, and not blind. Taxslayer military Her parents can claim her as a dependent on their tax return. Taxslayer military She has dividend income of $275 and wages of $2,500. Taxslayer military She enters $2,850 (her earned income plus $350) on line 1 of Worksheet 1. Taxslayer military On line 3, she enters $2,850, the larger of $2,850 or $1,000. Taxslayer military She enters $6,100 on line 4. Taxslayer military On line 5a, she enters $2,850 (the smaller of $2,850 or $6,100) as her standard deduction. Taxslayer military Example 3. Taxslayer military Amy, who is single, is claimed as a dependent on her parents' tax return. Taxslayer military She is 18 years old and blind. Taxslayer military She has taxable interest income of $1,000 and wages of $2,000. Taxslayer military She enters $2,350 (her earned income plus $350) on line 1 of Worksheet 1. Taxslayer military 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. Taxslayer military Because Amy is blind, she checks the box for blindness and enters “1” in box c at the top of Worksheet 1. Taxslayer military She enters $1,500 (the number in box c times $1,500) on line 5b. Taxslayer military Her standard deduction on line 5c is $3,850 ($2,350 + $1,500). Taxslayer military Standard Deduction of Zero The standard deduction for the following dependents is zero. Taxslayer military A married dependent filing a separate return whose spouse itemizes deductions. Taxslayer military 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. Taxslayer military A nonresident or dual-status alien dependent, unless the dependent is married to a U. Taxslayer military S. Taxslayer military citizen or resident alien at the end of the year and chooses to be treated as a U. Taxslayer military S. Taxslayer military resident for the year. Taxslayer military See Publication 519, U. Taxslayer military S. Taxslayer military Tax Guide for Aliens, for information on making this choice. Taxslayer military Example. Taxslayer military Jennifer, who is a dependent of her parents, is entitled to file a joint return with her husband. Taxslayer military However, her husband elects to file a separate return and itemize his deductions. Taxslayer military Because he itemizes, Jennifer's standard deduction on her return is zero. Taxslayer military She can, however, itemize any of her allowable deductions. Taxslayer military 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. Taxslayer military This is true even if the other taxpayer does not actually claim the exemption. Taxslayer military Example. Taxslayer military James and Barbara can claim their child, Ben, as a dependent on their return. Taxslayer military Ben is a college student who works during the summer and must file a tax return. Taxslayer military Ben cannot claim his own exemption on his return. Taxslayer military This is true even if James and Barbara do not claim him as a dependent on their return. Taxslayer military Withholding From Wages Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. Taxslayer military If the employee claims exemption from withholding on Form W-4, the employer will not withhold federal income tax. Taxslayer military The exemption from withholding does not apply to social security and Medicare taxes. Taxslayer military Conditions for exemption from withholding. Taxslayer military   An employee can claim exemption from withholding for 2014 only if he or she meets both of the following conditions. Taxslayer military For 2013, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability. Taxslayer military For 2014, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability. Taxslayer military Dependents. Taxslayer military   An employee who is a dependent ordinarily cannot claim exemption from withholding if both of the following are true. Taxslayer military The employee's gross income will be more than $1,000, the minimum standard deduction for 2014. Taxslayer military The employee's unearned income will be more than $350. Taxslayer military Exceptions. Taxslayer military   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. Taxslayer military The above exceptions do not apply to supplemental wages greater than $1,000,000. Taxslayer military For more information, see Exemption From Withholding in chapter 1 of Publication 505. Taxslayer military Example. Taxslayer military Guy is 17 and a student. Taxslayer military During the summer he works part time at a grocery store. Taxslayer military He expects to earn about $1,200 this year. Taxslayer military 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. Taxslayer military The only other income he expects during the year is $375 interest on a savings account. Taxslayer military He expects that his parents will be able to claim him as a dependent on their tax return. Taxslayer military He is not blind and will not claim adjustments to income, itemized deductions, a higher standard deduction, or tax credits on his return. Taxslayer military 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. Taxslayer military Claiming exemption from withholding. Taxslayer military    To claim exemption from withholding, an employee must enter “Exempt” in the space provided on Form W-4, line 7. Taxslayer military The employee must complete the rest of the form, as explained in the form instructions, and give it to his or her employer. Taxslayer military Renewing an exemption from withholding. Taxslayer military   An exemption from withholding is good for only one year. Taxslayer military An employee must file a new Form W-4 by February 15 each year to continue the exemption. Taxslayer military Part 2. Taxslayer military Tax on Unearned Income of Certain Children The two rules that follow may affect the tax on the unearned income of certain children. Taxslayer military 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. Taxslayer military (See Parent's Election To Report Child's Interest and Dividends , later. Taxslayer military ) 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. Taxslayer military (See Tax for Certain Children Who Have Unearned Income , later. Taxslayer military ) For these rules, the term “child” includes a legally adopted child and a stepchild. Taxslayer military These rules apply whether or not the child is a dependent. Taxslayer military These rules do not apply if neither of the child's parents were living at the end of the year. Taxslayer military 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. Taxslayer military 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 . Taxslayer military 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. Taxslayer military Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . Taxslayer military Parents are married. Taxslayer military   If the child's parents file separate returns, use the return of the parent with the greater taxable income. Taxslayer military Parents not living together. Taxslayer military   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. Taxslayer military If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. Taxslayer military   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. Taxslayer military Parents are divorced. Taxslayer military   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. Taxslayer military Custodial parent remarried. Taxslayer military   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. Taxslayer military Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. Taxslayer military Do not use the return of the noncustodial parent. Taxslayer military   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. Taxslayer military If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. Taxslayer military Parents never married. Taxslayer military   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. Taxslayer military If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. Taxslayer military Widowed parent remarried. Taxslayer military   If a widow or widower remarries, the new spouse is treated as the child's other parent. Taxslayer military The rules explained earlier under Custodial parent remarried apply. Taxslayer military 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. Taxslayer military If you do, your child will not have to file a return. Taxslayer military You can make this election only if all the following conditions are met. Taxslayer military Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. Taxslayer military Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). Taxslayer military The child's gross income was less than $10,000. Taxslayer military The child is required to file a return unless you make this election. Taxslayer military The child does not file a joint return for the year. Taxslayer military 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. Taxslayer military No federal income tax was withheld from your child's income under the backup withholding rules. Taxslayer military You are the parent whose return must be used when applying the special tax rules for children. Taxslayer military (See Which Parent's Return To Use , earlier. Taxslayer military ) These conditions are also shown in Figure 1. Taxslayer military Certain January 1 birthdays. Taxslayer military   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. Taxslayer military You cannot make this election for such a child unless the child was a full-time student. Taxslayer military   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. Taxslayer military You cannot make this election for such a child. Taxslayer military How to make the election. Taxslayer military    Make the election by attaching Form 8814 to your Form 1040 or Form 1040NR. Taxslayer military (If you make this election, you cannot file Form 1040A or Form 1040EZ. Taxslayer military ) Attach a separate Form 8814 for each child for whom you make the election. Taxslayer military You can make the election for one or more children and not for others. Taxslayer military Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. Taxslayer military Rate may be higher. Taxslayer military   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. Taxslayer military This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. Taxslayer military 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. Taxslayer military Deductions you cannot take. Taxslayer military   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. Taxslayer military The additional standard deduction if the child is blind. Taxslayer military The deduction for a penalty on an early withdrawal of your child's savings. Taxslayer military Itemized deductions (such as your child's investment expenses or charitable contributions). Taxslayer military Figure 1. Taxslayer military Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. Taxslayer military Figure 1. Taxslayer military Can You Include Your Child's Income On Your Tax Return? Deductible investment interest. Taxslayer military   If you use Form 8814, your child's unearned income is considered your unearned income. Taxslayer military To figure the limit on your deductible investment interest, add the child's unearned income to yours. Taxslayer military 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. Taxslayer military Alternative minimum tax. Taxslayer military    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. Taxslayer military If it is, you must include it with your own tax preference items when figuring your AMT. Taxslayer military See Form 6251, Alternative Minimum Tax—Individuals, and its instructions for details. Taxslayer military Reduced deductions or credits. Taxslayer military   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return, including the following. Taxslayer military Deduction for contributions to a traditional individual retirement arrangement (IRA). Taxslayer military Deduction for student loan interest. Taxslayer military Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. Taxslayer military Credit for child and dependent care expenses. Taxslayer military Child tax credit. Taxslayer military Education tax credits. Taxslayer military Earned income credit. Taxslayer military Penalty for underpayment of estimated tax. Taxslayer military   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. Taxslayer military 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. Taxslayer military Get Publication 505 for more information. Taxslayer military Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. Taxslayer military Only the amount over $2,000 is added to your income. Taxslayer military The amount over $2,000 is shown on Form 8814, line 6. Taxslayer military Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. Taxslayer military Include the amount from Form 8814, line 12, on Form 1040 or Form 1040NR, line 21. Taxslayer military 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. Taxslayer military On the dotted line next to line 21, enter “Form 8814” and the total of the Form 8814, line 12 amounts. Taxslayer military Note. Taxslayer military The tax on the first $2,000 is figured on Form 8814, Part II. Taxslayer military See Figuring Additional Tax , later. Taxslayer military Qualified dividends. Taxslayer military   Enter on Form 8814, line 2a, any ordinary dividends your child received. Taxslayer military This amount may include qualified dividends. Taxslayer military 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. Taxslayer military For detailed information about qualified dividends, see Publication 550. Taxslayer military   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. Taxslayer military You do not include these dividends on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. Taxslayer military   Enter the child's qualified dividends on Form 8814, line 2b. Taxslayer military But do not include this amount on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Taxslayer military Instead, include the amount from Form 8814, line 9, on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. Taxslayer military (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. Taxslayer military ) Capital gain distributions. Taxslayer military   Enter on Form 8814, line 3, any capital gain distributions your child received. Taxslayer military 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. Taxslayer military You do not include it on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. Taxslayer military   Include the amount from Form 8814, line 10, on Schedule D, line 13; Form 1040, line 13; or Form 1040NR, line 14, whichever applies. Taxslayer military (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. Taxslayer military ) Collectibles (28% rate) gain. Taxslayer military    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. Taxslayer military Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Taxslayer military The numerator is the part of the child's total capital gain distribution that is collectibles (28% rate) gain. Taxslayer military The denominator is the child's total capital gain distribution. Taxslayer military Enter the result on line 4 of the 28% Rate Gain Worksheet. Taxslayer military Unrecaptured section 1250 gain. Taxslayer military   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. Taxslayer military Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Taxslayer military The numerator is the part of the child's total capital gain distribution that is unrecaptured section 1250 gain. Taxslayer military The denominator is the child's total capital gain distribution. Taxslayer military Enter the result on the Unrecaptured Section 1250 Gain Worksheet, line 11. Taxslayer military Section 1202 gain. Taxslayer military   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. Taxslayer military (For information about the exclusion, see chapter 4 of Publication 550. Taxslayer military ) To figure that part, multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. Taxslayer military The numerator is the part of the child's total capital gain distribution that is section 1202 gain. Taxslayer military The denominator is the child's total capital gain distribution. Taxslayer military Your section 1202 exclusion is generally 50% of the result, but may be subject to a limit. Taxslayer military In some cases, the exclusion is more than 50%. Taxslayer military See the instructions for Schedule D for details and information on how to report the exclusion amount. Taxslayer military Example. Taxslayer military Fred is 6 years old. Taxslayer military 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. Taxslayer military (None of the distributions were reported on Form 1099-DIV as unrecaptured section 1250 gain, section 1202 gain, or collectibles (28% rate) gain. Taxslayer military ) All of the ordinary dividends are qualified dividends. Taxslayer military He has no other income and is not subject to backup withholding. Taxslayer military No estimated tax payments were made under his name and social security number. Taxslayer military Fred's parents elect to include Fred's income on their tax return instead of filing a return for him. Taxslayer military 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. Taxslayer military They leave lines 1a and 1b of Form 8814 blank because Fred does not have any interest income. Taxslayer military They enter his ordinary dividends of $1,575 on lines 2a and 2b because all of Fred's ordinary dividends are qualified dividends. Taxslayer military They enter the amount of Fred's capital gain distributions, $525, on line 3. Taxslayer military Next, they add the amounts on lines 1a, 2a, and 3 and enter the result, $2,100, on line 4. Taxslayer military 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. Taxslayer military This is the total amount from Form 8814 to be reported on their return. Taxslayer military Next, they figure how much of this amount is qualified dividends and how much is capital gain distributions. Taxslayer military They divide the amount on line 2b, $1,575, by the amount on line 4, $2,100. Taxslayer military They enter the result, . Taxslayer military 75, on line 7. Taxslayer military They divide the amount on line 3, $525, by the amount on line 4, $2,100. Taxslayer military They enter the result, . Taxslayer military 25, on line 8. Taxslayer military They multiply the amount on line 6, $100, by the decimal on line 7, . Taxslayer military 75, and enter the result, $75, on line 9. Taxslayer military They multiply the amount on line 6, $100, by the decimal on line 8, . Taxslayer military 25, and enter the result, $25, on line 10. Taxslayer military 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. Taxslayer military 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. Taxslayer military They enter $100 ($75 + $25) on line 11 and -0- ($100 – $100) on line 12. Taxslayer military Because the amount on line 12 is -0-, they do not include any amount from Form 8814 on their Form 1040, line 21. Taxslayer military 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. Taxslayer military This tax is added to the tax figured on your income. Taxslayer military This additional tax is the smaller of: 10% x (your child's gross income − $1,000), or $100. Taxslayer military Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44, or Form 1040NR, line 42. Taxslayer military Check box a on Form 1040, line 44, or Form 1040NR, line 42. Taxslayer military 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. Taxslayer military 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. Taxslayer military Attach the completed form to the child's Form 1040, Form 1040A, or Form 1040NR. Taxslayer military When Form 8615 must be filed. Taxslayer military   Form 8615 must be filed for a child if all of the following statements are true. Taxslayer military The child's unearned income was more than $2,000. Taxslayer military The child is required to file a return for 2013. Taxslayer military 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. Taxslayer military At least one of the child's parents was alive at the end of 2013. Taxslayer military The child does not file a joint return for 2013. Taxslayer military These conditions are also shown in Figure 2. Taxslayer military Certain January 1 birthdays. Taxslayer military   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. Taxslayer military IF a child was born on. Taxslayer military . Taxslayer military . Taxslayer military THEN, at the end of 2013, the child is considered to be. Taxslayer military . Taxslayer military . Taxslayer military January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. Taxslayer military The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. Taxslayer military  **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. Taxslayer military  ***Do not use Form 8615 for this child. Taxslayer military Figure 2. Taxslayer military Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. Taxslayer military Figure 2. Taxslayer military 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. Taxslayer military (If the parents filed a joint return, enter the name and social security number listed first on the joint return. Taxslayer military ) On line C, check the box for the parent's filing status. Taxslayer military See Which Parent's Return To Use, earlier, for information on which parent's return information must be used on Form 8615. Taxslayer military Parent with different tax year. Taxslayer military   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. Taxslayer military Example. Taxslayer military Kimberly must use her mother's tax and taxable income to complete her Form 8615 for calendar year 2013 (January 1 – December 31). Taxslayer military Kimberly's mother files her tax return on a fiscal year basis (July 1 – June 30). Taxslayer military Kimberly must use the information on her mother's return for the tax year ending June 30, 2013, to complete her 2013 Form 8615. Taxslayer military Parent's return information not known timely. Taxslayer military   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. Taxslayer military   You can use any reasonable estimate. Taxslayer military This includes using information from last year's return. Taxslayer military If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. Taxslayer military   When you get the correct information, file an amended return on Form 1040X, Amended U. Taxslayer military S. Taxslayer military Individual Income Tax Return. Taxslayer military Extension of time to file. Taxslayer military   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. Taxslayer military S. Taxslayer military Individual Income Tax Return. Taxslayer military See the instructions for Form 4868 for details. Taxslayer military    An extension of time to file is not an extension of time to pay. Taxslayer military You must make an accurate estimate of the tax for 2013. Taxslayer military 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. Taxslayer military See Form 4868 and its instructions. Taxslayer military Parent's return information not available. Taxslayer military   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). Taxslayer military How to request. Taxslayer military   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. Taxslayer military (The IRS cannot process a request received before the end of the tax year. Taxslayer military )    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. Taxslayer military   The request must contain all of the following. Taxslayer military 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. Taxslayer military Proof of the child's age (for example, a copy of the child's birth certificate). Taxslayer military 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). Taxslayer military 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. Taxslayer military    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. Taxslayer military Step 1. Taxslayer military 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. Taxslayer military To do that, use Form 8615, Part I. Taxslayer military 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. Taxslayer military Adjusted gross income is shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Taxslayer military Form 1040EZ and Form 1040NR-EZ cannot be used if Form 8615 must be filed. Taxslayer military 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. Taxslayer military 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. Taxslayer military Alternate Worksheet for Form 8615, Line 1 A. Taxslayer military Enter the amount from the child's Form 1040, line 22, or Form 1040NR, line 23   B. Taxslayer military 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. Taxslayer military Enter this total as a positive number (greater than zero)   C. Taxslayer military Add line A and line B and  enter the total   D. Taxslayer military 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. Taxslayer military Subtract line D from line C. Taxslayer military Enter the result here and on Form 8615, line 1   Unearned income defined. Taxslayer military   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually performed. Taxslayer military 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. Taxslayer military 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). Taxslayer military Nontaxable income. Taxslayer military   For this purpose, unearned income includes only amounts the child must include in gross income. Taxslayer military Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. Taxslayer military Capital loss. Taxslayer military   A child's capital losses are taken into account in figuring the child's unearned income. Taxslayer military Capital losses are first applied against capital gains. Taxslayer military 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. Taxslayer military Any difference over $3,000 is carried to the next year. Taxslayer military Income from property received as a gift. Taxslayer military   A child's unearned income includes all income produced by property belonging to the child. Taxslayer military 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. Taxslayer military   A child's unearned income includes income produced by property given as a gift to the child. Taxslayer military This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. Taxslayer military Example. Taxslayer military Amanda Black, age 13, received the following income. Taxslayer military 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. Taxslayer military Amanda's unearned income is $2,100. Taxslayer military This is the total of the dividends ($800), taxable interest ($1,200), and capital gains reduced by capital losses ($300 − $200 = $100). Taxslayer military Her wages are earned (not unearned) income because they are received for work actually performed. Taxslayer military Her tax-exempt interest is not included because it is nontaxable. Taxslayer military Trust income. Taxslayer military   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. Taxslayer military   However, taxable distributions from a qualified disability trust are considered earned income for the purposes of completing Form 8615. Taxslayer military See the Form 8615 instructions for details. Taxslayer military Adjustment to income. Taxslayer military   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. Taxslayer military Line 2 (Deductions) If the child does not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter $2,000 on line 2. Taxslayer military 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. Taxslayer military Directly connected. Taxslayer military   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. Taxslayer military These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. Taxslayer military    These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). Taxslayer military Only the amount greater than 2% of the child's adjusted gross income can be deducted. Taxslayer military See Publication 529, Miscellaneous Deductions, for more information. Taxslayer military Example 1. Taxslayer military 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. Taxslayer military His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. Taxslayer military 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. Taxslayer military Example 2. Taxslayer military Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. Taxslayer military She has no other income. Taxslayer military 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. Taxslayer military Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). Taxslayer military The amount on line 2 is $2,050. Taxslayer military This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. Taxslayer military Line 3 Subtract line 2 from line 1 and enter the result on this line. Taxslayer military If zero or less, do not complete the rest of the form. Taxslayer military However, you must still attach Form 8615 to the child's tax return. Taxslayer military Figure the tax on the child's taxable income in the normal manner. Taxslayer military 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. Taxslayer military Child files Form 2555 or 2555-EZ. Taxslayer military   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. Taxslayer military Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the child's taxable income on Form 8615, line 4. Taxslayer military Line 5 (Net Unearned Income) A child's net unearned income cannot be more than his or her taxable income. Taxslayer military Enter on Form 8615, line 5, the smaller of line 3 or line 4. Taxslayer military This is the child's net unearned income. Taxslayer military If zero or less, do not complete the rest of the form. Taxslayer military However, you must still attach Form 8615 to the child's tax return. Taxslayer military Figure the tax on the child's taxable income in the normal manner. Taxslayer military Step 2. Taxslayer military 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. Taxslayer military 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. Taxslayer military 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. Taxslayer military For example, do not refigure the medical expense deduction. Taxslayer military Figure the tentative tax on Form 8615, lines 6 through 13. Taxslayer military 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. Taxslayer military If the parent's taxable income is zero or less, enter zero on line 6. Taxslayer military Parent files Form 2555 or 2555-EZ. Taxslayer military   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. Taxslayer military 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. Taxslayer military 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. Taxslayer military Do not include the amount from line 5 of the Form 8615 being completed. Taxslayer military (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. Taxslayer military ) Example. Taxslayer military Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. Taxslayer military 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. Taxslayer military Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). Taxslayer military Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). Taxslayer military Other children's information not available. Taxslayer military   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. Taxslayer military Estimates and extensions are discussed earlier under Providing Parental Information (Form 8615, Lines A–C) . Taxslayer military Line 8 (Parent's Taxable Income Plus Children's Net Unearned Income) Enter on this line the total of lines 5, 6, and 7. Taxslayer military You must determine the amount of net capital gain and qualified dividends included on this line before completing Form 8615, line 9. Taxslayer military Net capital gain. Taxslayer military   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. Taxslayer military If Schedule D is not required, it is the amount on Form 1040, line 13; Form 1040A, line 10; or Form 1040NR, line 14. Taxslayer military Qualified dividends. Taxslayer military   Qualified dividends are those dividends reported on line 9b of Form 1040 or Form 1040A, or line 10b of Form 1040NR. Taxslayer military Net capital gain and qualified dividends on line 8. Taxslayer military   If neither the child, nor the parent, nor any other child has net capital gain, the net capital gain on line 8 is zero. Taxslayer military   If neither the child, nor the parent, nor any other child has qualified dividends, the amount of qualified dividends on line 8 is zero. Taxslayer military   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. Taxslayer military   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. Taxslayer military   Use the instructions for Form 8615, line 8, including the appropriate Line 5 Worksheet, to find these amounts. Taxslayer military See the instructions for Form 8615 for more details. Taxslayer military Note. Taxslayer military The amount of any net capital gain or qualified dividends is not separately reported on line 8. Taxslayer military It is  needed, however, when figuring the tax on line 9. Taxslayer military 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. Taxslayer military 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. Taxslayer military 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. Taxslayer military If line 8 includes any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. Taxslayer military For details, see the instructions for Form 8615, line 9. Taxslayer military However, if the child, parent, or any other child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. Taxslayer military But if Schedule J is used to figure the tax on the parent's return, use it to figure this tax. Taxslayer military Child files Form 2555 or 2555-EZ. Taxslayer military   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. Taxslayer military Using the Schedule D Tax Worksheet for line 9 tax. Taxslayer military    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. Taxslayer military 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. Taxslayer military Then figure the line 9 tax using another Schedule D Tax Worksheet. Taxslayer military (Do not attach this Schedule D Tax Worksheet to the child's return. Taxslayer military )   Complete this Schedule D Tax Worksheet as follows. Taxslayer military On line 1, enter the amount from Form 8615, line 8. Taxslayer military On line 2, enter the qualified dividends included on Form 8615, line 8. Taxslayer military (See the earlier discussion for line 8. Taxslayer military ) 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. Taxslayer military 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. Taxslayer military If applicable, include instead the smaller amount entered on the dotted line next to line 4e. Taxslayer military On lines 5 and 6, follow the worksheet instructions. Taxslayer military On line 7, enter the net capital gain included on Form 8615, line 8. Taxslayer military (See the earlier discussion for line 8. Taxslayer military ) On lines 8 through 10, follow the worksheet instructions. Taxslayer military 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). Taxslayer military 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. Taxslayer military Figure these amounts as explained later under Figuring unrecaptured section 1250 gain (line 11) and Figuring 28% rate gain (line 11). Taxslayer military 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. Taxslayer military Otherwise, skip steps 10, 11, and 12 below, and go to step 13. Taxslayer military Determine whether there is a line 8 capital gain excess as follows. Taxslayer military 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. Taxslayer military (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. Taxslayer military ) Subtract (a) from the amount on line 1 of this Schedule D Tax Worksheet. Taxslayer military Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. Taxslayer military If the result is more than zero, that amount is the line 8 capital gain excess. Taxslayer military If the result is zero or less, there is no line 8 capital gain excess. Taxslayer military If there is no line 8 capital gain excess, skip step 12 below and go to step 13. Taxslayer military 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. Taxslayer military (These modifications are to be made only for purposes of filling out this additional Schedule D Tax Worksheet. Taxslayer military ) Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 8 capital gain excess. Taxslayer military 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. Taxslayer military 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. Taxslayer military 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. Taxslayer military Complete lines 12 through 45 following the worksheet instructions. Taxslayer military Use the parent's filing status to complete lines 15, 42, and 44. Taxslayer military Enter the amount from line 45 of this Schedule D Tax Worksheet on Form 8615, line 9, and check the box on that line