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Www myfreetaxes com upstreetfreetax Index Symbols 403(b) plans Defined, Tax-sheltered annuity plan. Www myfreetaxes com upstreetfreetax Loans from, without tax consequences, Exception for qualified plan, 403(b) plan, and government plan loans. Www myfreetaxes com upstreetfreetax Simplified Method to be used, Who must use the Simplified Method. Www myfreetaxes com upstreetfreetax 5% owners, 5% owners. Www myfreetaxes com upstreetfreetax A Age 70, Age 70½. Www myfreetaxes com upstreetfreetax Alimony (see Qualified domestic relations orders (QDROs)) Annuities 5% rate on early distributions, 5% rate on certain early distributions from deferred annuity contracts. Www myfreetaxes com upstreetfreetax Defined, Annuity. Www myfreetaxes com upstreetfreetax Fixed-period, Fixed-period annuities. Www myfreetaxes com upstreetfreetax , Fixed-period annuity. Www myfreetaxes com upstreetfreetax Guaranteed payments, Guaranteed payments. 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Www myfreetaxes com upstreetfreetax Costs Investment in the contract, Cost (Investment in the Contract) Lump-sum distribution, determination for, Cost. Www myfreetaxes com upstreetfreetax D Death benefits, Death benefits. Www myfreetaxes com upstreetfreetax Death of employee, Distributions after the employee's death. Www myfreetaxes com upstreetfreetax , Survivors of employees. Www myfreetaxes com upstreetfreetax Death of retiree, Survivors of retirees. Www myfreetaxes com upstreetfreetax Deductible voluntary employee contributions, Deductible voluntary employee contributions. Www myfreetaxes com upstreetfreetax Defined contribution plans, Defined contribution plan. Www myfreetaxes com upstreetfreetax Designated Roth accounts Costs, Designated Roth accounts. Www myfreetaxes com upstreetfreetax Defined, Designated Roth account. Www myfreetaxes com upstreetfreetax Qualified distributions, Designated Roth accounts. Www myfreetaxes com upstreetfreetax Rollovers, Designated Roth accounts. 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Www myfreetaxes com upstreetfreetax Form W-4V Voluntary withholding request for social security or railroad retirement benefits, Withholding Tax and Estimated Tax Free tax services, Free help with your tax return. Www myfreetaxes com upstreetfreetax Frozen deposits, Frozen deposits. Www myfreetaxes com upstreetfreetax Fully taxable payments, Fully Taxable Payments G General Rule, Partly Taxable Payments, General Rule Death of retiree under, Survivors of retirees. Www myfreetaxes com upstreetfreetax Investment in the contract, determination of, Cost (Investment in the Contract) Guaranteed payments, Guaranteed payments. Www myfreetaxes com upstreetfreetax H Help (see Tax help) Home purchase Loans from qualified plans for, Exception for qualified plan, 403(b) plan, and government plan loans. Www myfreetaxes com upstreetfreetax I In-plan Roth rollovers, In-plan Roth rollovers. Www myfreetaxes com upstreetfreetax Individual retirement accounts Minimum distributions from, Minimum distributions from an individual account plan. Www myfreetaxes com upstreetfreetax Rollovers, Rollovers (see also Rollovers) Interest deduction Denial on loan from plan, Denial of interest deduction. Www myfreetaxes com upstreetfreetax J Joint and survivor annuities, Joint and survivor annuities. Www myfreetaxes com upstreetfreetax L Loans treated as distributions, Loans Treated as Distributions Local government employees Section 457 plans, Section 457 Deferred Compensation Plans Losses Lump-sum distribution, Losses. Www myfreetaxes com upstreetfreetax Lump-sum distributions, Distributions of employer securities. Www myfreetaxes com upstreetfreetax , Lump-Sum Distributions, Examples 10-year tax option, 10-Year Tax Option Capital gain treatment, Capital Gain Treatment Defined, Lump-Sum Distributions Election of, Changing your mind. Www myfreetaxes com upstreetfreetax Form 4972, Lump-Sum Distributions M Minimum required distributions, Recapture tax for changes in distribution method under equal payment exception. Www myfreetaxes com upstreetfreetax Missing children, photographs of, Reminders Multiple annuitants, Multiple annuitants. Www myfreetaxes com upstreetfreetax Multiple-lives annuities, Multiple-lives annuity. Www myfreetaxes com upstreetfreetax N Net Investment Income Tax, Net investment income tax. Www myfreetaxes com upstreetfreetax , Distribution Before Annuity Starting Date From a Nonqualified Plan Net unrealized appreciation (NUA), Net unrealized appreciation (NUA). Www myfreetaxes com upstreetfreetax Deferring tax on, Distributions of employer securities. Www myfreetaxes com upstreetfreetax Nonperiodic payments Loan treated as, Loans Treated as Distributions Taxation of, Taxation of Nonperiodic Payments Nonqualified plans Distribution before annuity start date, Distribution Before Annuity Starting Date From a Nonqualified Plan General Rule to be used, Who must use the General Rule. Www myfreetaxes com upstreetfreetax Loans treated as distributions from, Effect on investment in the contract. Www myfreetaxes com upstreetfreetax Nonresident aliens Railroad retirement, Nonresident aliens. Www myfreetaxes com upstreetfreetax P Partial rollovers, Partial rollovers. Www myfreetaxes com upstreetfreetax Partly taxable payments, Partly Taxable Payments Penalty taxes Early distributions, Tax on Early Distributions Excess accumulation, Tax on Excess Accumulation Pensions Defined, Pension. Www myfreetaxes com upstreetfreetax Disability pensions, Disability pensions. Www myfreetaxes com upstreetfreetax , Disability Pensions Types of, Types of pensions and annuities. Www myfreetaxes com upstreetfreetax Periodic payments Taxation of, Taxation of Periodic Payments Withholding tax, Periodic payments. Www myfreetaxes com upstreetfreetax Public safety officers insurance premiums, Insurance Premiums for Retired Public Safety Officers Public school employees Tax-sheltered annuity plans for (see 403(b) plans) Publications (see Tax help) Q Qualified domestic relations orders (QDROs), Qualified domestic relations order (QDRO). Www myfreetaxes com upstreetfreetax , Qualified domestic relations order (QDRO). Www myfreetaxes com upstreetfreetax Alternate payee under and lump-sum distribution, Alternate payee under qualified domestic relations order. Www myfreetaxes com upstreetfreetax Qualified employee annuities Defined, Qualified employee annuity. Www myfreetaxes com upstreetfreetax Simplified Method to be used, Who must use the Simplified Method. Www myfreetaxes com upstreetfreetax Qualified employee plans Defined, Qualified employee plan. Www myfreetaxes com upstreetfreetax Simplified Method to be used, Who must use the Simplified Method. Www myfreetaxes com upstreetfreetax Qualified plans, Who must use the General Rule. Www myfreetaxes com upstreetfreetax (see also specific type of plan ) Distribution before annuity starting date, Distribution Before Annuity Starting Date From a Qualified Plan General Rule, Who must use the General Rule. Www myfreetaxes com upstreetfreetax Loans from, without tax consequences, Exception for qualified plan, 403(b) plan, and government plan loans. Www myfreetaxes com upstreetfreetax Rollovers, Qualified retirement plan. Www myfreetaxes com upstreetfreetax Qualified settlement income Exxon Valdez litigation settlement, Qualified settlement income. Www myfreetaxes com upstreetfreetax R Railroad retirement benefits, Railroad Retirement Benefits, Repayment of benefits received in an earlier year. Www myfreetaxes com upstreetfreetax Taxability of, Withholding Tax and Estimated Tax Recapture tax Changes in distribution method, Recapture tax for changes in distribution method under equal payment exception. Www myfreetaxes com upstreetfreetax Reemployment, Reemployment. Www myfreetaxes com upstreetfreetax Related employers and related plans, Related employers and related plans. Www myfreetaxes com upstreetfreetax Repayment of loan within 5 years, Exception for qualified plan, 403(b) plan, and government plan loans. Www myfreetaxes com upstreetfreetax Required beginning date, Required beginning date. Www myfreetaxes com upstreetfreetax Required distributions, minimum, Recapture tax for changes in distribution method under equal payment exception. Www myfreetaxes com upstreetfreetax Retirement bonds, Retirement bonds. Www myfreetaxes com upstreetfreetax Rollovers, Rollovers, Choosing the right option. Www myfreetaxes com upstreetfreetax 20% tax rate on distribution, Eligible rollover distribution. Www myfreetaxes com upstreetfreetax Comparison of direct payment vs. Www myfreetaxes com upstreetfreetax direct rollover (Table 1), Choosing the right option. Www myfreetaxes com upstreetfreetax Direct rollover to another qualified plan, Eligible rollover distribution. Www myfreetaxes com upstreetfreetax , Direct rollover option. Www myfreetaxes com upstreetfreetax In-plan Roth, In-plan Roth rollovers. Www myfreetaxes com upstreetfreetax Nonspouse beneficiary, Rollovers by nonspouse beneficiary. Www myfreetaxes com upstreetfreetax Nontaxable amounts, Rollover of nontaxable amounts. Www myfreetaxes com upstreetfreetax Notice to recipients of eligible rollover distribution, Written explanation to recipients. Www myfreetaxes com upstreetfreetax Property and cash distributed, Property and cash distributed. Www myfreetaxes com upstreetfreetax Roth IRAs, Rollovers to Roth IRAs. Www myfreetaxes com upstreetfreetax Substitution of other property, Rollovers of property. Www myfreetaxes com upstreetfreetax Surviving spouse making, Rollover by surviving spouse. Www myfreetaxes com upstreetfreetax S Section 457 deferred compensation plans, Section 457 Deferred Compensation Plans Securities of employer, distributions of, Distributions of employer securities. Www myfreetaxes com upstreetfreetax Self-employed persons' rollovers, Rollovers Simplified Method, Partly Taxable Payments, Simplified Method Death of retiree under, Survivors of retirees. Www myfreetaxes com upstreetfreetax How to use, How to use the Simplified Method. Www myfreetaxes com upstreetfreetax Investment in the contract, determination of, Cost (Investment in the Contract) Not allowed, Who cannot use the Simplified Method. Www myfreetaxes com upstreetfreetax Single-sum in connection with start of payments, Single-sum in connection with the start of annuity payments. 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Mortgage Transfers and Refinancing

Mortgage Refinancing

Consider refinancing your mortgage if you can get a rate that is at least one percentage point lower than your existing mortgage rate and if you plan to keep the new mortgage for several years. When comparing mortgages, don't forget to include the extra fees you must pay for the new mortgage. You may be able to get some fees waived if you are able to refinance with your current mortgage holder.

In addition, the Making Home Affordable Program offers opportunities to modify or refinance your mortgage to make your monthly payments more affordable. It also includes the Home Affordable Foreclosure Alternatives Program for homeowners who are interested in a short sale or deed-in-lieu of foreclosure.  Visit the website or call 1-888-995-4673 for more information.

Mortgage Transfers

New Federal Reserve rules help mortgage borrowers by requiring that mortgage companies notify them when their loans are transferred to another company. Before the new rules, if your loan was sold or transferred from your current lender to a new lender, the new lender did not have to tell you that it acquired your loan. The new rules ensure that you know who owns your loan, which is important information if you have questions or payment disputes or want to discuss loan modifications.

Under new rules, the company that takes over your loan must send you a notice within 30 days of acquiring it. Even with a new loan owner, the company that "services" or handles your loan might not change and you might continue to send your payments to the same address. If that loan servicer changes, you will receive a separate notice.

For more information about servicing companies, read the Federal Trade Commission's publication "Mortgage Servicing: Making Sure Your Payments Count".

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