2006 Publication[632]

Publication 929

Cat. No. 64349Y Contents

What’s New . . . . . . . . . . . . . . . . . . . . . 1

Department

of the

Treasury Tax Rules for Reminders . . . . . . . . . . . . . . . . . . . . . .

Introduction . . . . . . . . . . . . . . . . . . . . .

2

2

Internal

Revenue

Service

Children and Part 1. Rules for All Dependents . . . . . .

Filing Requirements . . . . . . . . . . . . .

2

3



Dependents Should a Return Be Filed Even If

Not Required? . . . . . . . . . . . . . . 4

Responsibility for Child’s

Return . . . . . . . . . . . . . . . . . . . 4

For use in preparing Standard Deduction . . . . . . . . . . . . . 5

Dependent’s Own Exemption . . . . . . . 5



2006 Returns Withholding From Wages . . . . . . . . .

Part 2. Tax on Investment Income

5





of Child Under 18 . . . . . . . . . . . . . . 6

Parent’s Election To Report

Child’s Interest and

Dividends . . . . . . . . . . . . . . . . . 6

Tax for Children Under Age 18

Who Have Investment

Income of More Than $1,700 . . . . 10

Glossary . . . . . . . . . . . . . . . . . . . . . . . 23

How To Get Tax Help . . . . . . . . . . . . . . 24

Index . . . . . . . . . . . . . . . . . . . . . . . . . . 26









What’s New

Filing requirements. The amount of gross in-

come that many dependents with earned in-

come (wages, tips, etc.) can have during the

year without having to file a return has in-

creased. See Filing Requirements in Part 1.



Standard deduction. The standard deduction

for many dependents with earned income

(wages, tips, etc.) has increased. See Standard

Deduction in Part 1.



Investment income of child under age 18. A

child’s investment income may be subject to tax

at the parent’s tax rate if the child is under age

18 (previously under age 14) at the end of the

year. The amount of taxable investment income

the child can have without it being subject to tax

at the parent’s rate has increased to $1,700

(previously $1,600). See Part 2.



Alternative minimum tax. The limit on the

exemption amount for figuring the alternative

minimum tax of a child filing Form 8615 has

increased to the child’s earned income plus

$6,050 (previously $5,850). See Alternative

Minimum Tax in Part 2.



Foreign earned income exclusion. If the

child or parent claimed the foreign earned in-

Get forms and other information come exclusion or housing exclusion on Form

faster and easier by: 2555 or Form 2555-EZ, special rules apply

when using Form 8615 and the Foreign Earned

Internet • www.irs.gov Income Tax Worksheet to figure the child’s tax.

See Part 2.

Table 1. 2006 Filing Requirements for Dependents Definitions. Many of the terms used in this

publication, such as “dependent,” “earned in-

If your parent (or someone else) can claim you as a dependent, use this table to see if you come,” and “unearned income,” are defined in

must file a return. the Glossary at the back of this publication.

See the definitions of “dependent,” “earned income,” and “unearned income” in the Comments and suggestions. We welcome

Glossary. your comments about this publication and your

suggestions for future editions.

Single dependents — Were you either age 65 or older or blind?

You can write to us at the following address:

No. You must file a return if any of the following apply.

• Your unearned income was over $850. Internal Revenue Service

• Your earned income was over $5,150. Individual Forms and Publications Branch

• Your gross income was more than the larger of: SE:W:CAR:MP:T:I

• $850, or 1111 Constitution Ave. NW, IR-6406

• Your earned income (up to $4,850) plus $300. Washington, DC 20224



Yes. You must file a return if any of the following apply. We respond to many letters by telephone.

• Your unearned income was over $2,100 ($3,350 if 65 or over and blind), Therefore, it would be helpful if you would in-

• Your earned income was over $6,400 ($7,650 if 65 or older and blind), clude your daytime phone number, including the

• Your gross income was more than — area code, in your correspondence.

The larger of: This amount: You can email us at *taxforms@irs.gov. (The

asterisk must be included in the address.)

• $850, or PLUS

$1,250 ($2,500 if 65

Please put “Publications Comment” on the sub-

• Your earned income (up to $4,850) plus $300 or older and blind)

ject line. Although we cannot respond individu-

ally to each email, we do appreciate your

Married dependents — Were you either age 65 or older or blind? feedback and will consider your comments as

No. You must file a return if any of the following apply. we revise our tax products.

• Your gross income was at least $5 and your spouse files a separate return and Ordering forms and publications. Visit

itemizes deductions. www.irs.gov/formspubs to download forms and

• Your unearned income was over $850. publications, call 1-800-829-3676, or write to the

• Your earned income was over $5,150. address below and receive a response within 10

• Your gross income was more than the larger of: business days after your request is received.

• $850, or

• Your earned income (up to $4,850) plus $300. National Distribution Center

P.O. Box 8903

Yes. You must file a return if any of the following apply. Bloomington, IL 61702-8903

• Your gross income was at least $5 and your spouse files a separate return and

itemizes deductions. Tax questions. If you have a tax question,

• Your unearned income was over $1,850 ($2,850 if 65 or over and blind), visit www.irs.gov or call 1-800-829-1040. We

• Your earned income was over $6,150 ($7,150 if 65 or older and blind), cannot answer tax questions sent to either of the

• Your gross income was more than — above addresses.

The larger of: This amount:

• $850, or PLUS

$1,000 ($2,000 if 65 Useful Items

• Your earned income (up to $4,850) plus $300 or older and blind) You may want to see:



Publication

An ITIN is for tax use only. It does not entitle ❏ 501 Exemptions, Standard Deduction,

you to social security benefits or change your

Reminders employment or immigration status under U.S.

and Filing Information



law. Form (and Instructions)

Social security number (SSN). Dependents

who are required to file a tax return must have Photographs of missing children. The Inter- ❏ W-4 Employee’s Withholding Allowance

an SSN. To apply for an SSN, file Form SS-5 nal Revenue Service is a proud partner with the Certificate

with the Social Security Administration. You can National Center for Missing and Exploited Chil- ❏ 8615 Tax for Children Under Age 18 With

go to the website www.socialsecurity.gov for dren. Photographs of missing children selected Investment Income of More Than

more information. by the Center may appear in this publication on $1,700

pages that would otherwise be blank. You can

Individual taxpayer identification number help bring these children home by looking at the ❏ 8814 Parents’ Election To Report Child’s

(ITIN). The IRS will issue an ITIN to a nonresi- photographs and calling 1-800-THE-LOST Interest and Dividends

(1-800-843-5678) if you recognize a child. See How To Get Tax Help near the end of

dent or resident alien who does not have and is

this publication for information about getting

not eligible to get an SSN. To apply for an ITIN,

these publications and forms.

file Form W-7, Application for IRS Individual

Taxpayer Identification Number, with the IRS. It

usually takes about 4 to 6 weeks to get an ITIN. Introduction

The ITIN is entered wherever an SSN is re-

quested on a tax return. If you are a nonresident

Part 1 of this publication explains the filing re- Part 1. Rules for

quirements and other tax information for individ-

alien applying for an ITIN to file a tax return, you uals who can be claimed as a dependent on All Dependents

generally must attach your original, completed another person’s tax return.

return to Form W-7 to get an ITIN. If you are Part 2 explains how to report and figure the

Terms you may need to know

required to include another person’s SSN on tax on certain investment income of children

(see Glossary):

your return and that person does not have and under age 18 (whether or not they can be

cannot get an SSN, enter that person’s ITIN. claimed as dependents). Dependent



Page 2 Publication 929 (2006)

Earned income Unearned Income Only him on their income tax return. He received $200

taxable interest income and earned $2,750 from

Exemption

A dependent must file a return if all his or her a part-time job.

Gross income income is unearned income, and the total is He does not have to file a tax return because

Itemized deductions more than the amount listed in the following his total income of $2,950 ($200 interest plus

table. $2,750 in wages) is not more than $3,050, the

Standard deduction

amount on line 5 of his filled-in Filing Require-

Marital Status Amount

Unearned income ment Worksheet for Most Dependents (shown

Single next).

Under 65 and not blind . ....... $ 850

This part of the publication discusses the filing Either 65 or older or blind ....... $2,100 Filing Requirement Worksheet

requirements for dependents, who is responsi- 65 or older and blind . . . ....... $3,350 for Most Dependents

ble for a child’s return, how to figure a depen- Married*

Under 65 and not blind . ....... $ 850 1. Enter dependent’s earned

dent’s standard deduction and exemption (if income plus $300 . . . . . . . . .. $ 3,050

any), and whether a dependent can claim ex- Either 65 or older or blind ....... $1,850

65 or older and blind . . . ....... $2,850 2. Minimum amount . . . . . . . . . .. 850

emption from federal income tax withholding. 3. Compare lines 1 and 2. Enter

*If a dependent’s spouse itemizes deductions on a the larger amount . . . . . . . . .. 3,050

separate return, the dependent must file a return if 4. Maximum amount . . . . . . . . .. 5,150

the dependent has $5 or more of gross income

(earned and/or unearned). 5. Compare lines 3 and 4. Enter

Filing Requirements the smaller amount . . . . . . . . . 3,050

6. Enter the dependent’s gross

Example. Sarah is 18 and single. Her par-

Whether a dependent has to file a return gener- (total) income. If line 6 is more

ents can claim an exemption for her on their

ally depends on the amount of the dependent’s than line 5, the dependent must

income tax return. She received $970 of taxable file an income tax return. If the

earned and unearned income and whether the

interest and dividend income. She did not work dependent is married and his or

dependent is married, is age 65 or older, or is during the year.

blind. her spouse itemizes deductions

She must file a tax return because she has on a separate return, the

A dependent may have to file a return unearned income only and her total income is dependent must file an income

! even if his or her income is below the more than $850. If she were blind, she would not

have to file a return because she has unearned

tax return if line 6 is $5 or more. $ 2,950

CAUTION

amount that would normally require a

return. See Other Filing Requirements, later. income only and her total income is not more

The following sections apply to dependents than $2,100.

Example 2. The facts are the same as in

with: Election to report child’s unearned income Example 1 except that Joe had $600 taxable

• Earned income only, on parent’s return. A parent of a child under interest income.

age 18 may be able to elect to include the child’s

• Unearned income only, and interest and dividend income on the parent’s He must file a tax return because his total

income of $3,350 ($600 interest plus $2,750

• Both earned and unearned income. return. See Parent’s Election To Report Child’s

Interest and Dividends in Part 2. If the parent wages) is more than $3,050, the amount on line

To find out whether a dependent must file, read makes this election, the child does not have to 5 of his filled-in worksheet (shown next).

the section that applies, or use Table 1 on the file a return.

previous page. Filing Requirement Worksheet

for Most Dependents

Earned and

Earned Income Only Unearned Income 1. Enter dependent’s earned

income plus $300 . . . . . . . . .. $ 3,050

A dependent must file a return if all his or her 2. Minimum amount . . . . . . . . . .. 850

income is earned income, and the total is more A dependent who has both earned and 3. Compare lines 1 and 2. Enter

than the amount listed in the following table. unearned income generally must file a the larger amount . . . . . . . . .. 3,050

return if the total income is more than 4. Maximum amount . . . . . . . . .. 5,150

Marital Status Amount line 5 of the following worksheet.

5. Compare lines 3 and 4. Enter

Single Filing Requirement Worksheet the smaller amount . . . . . . . . . 3,050

Under 65 and not blind . ....... $5,150 for Most Dependents 6. Enter the dependent’s gross

Either 65 or older or blind ....... $6,400 1. Enter dependent’s earned (total) income. If line 6 is more

65 or older and blind . . . ....... $7,650 income plus $300 . . . . . . . . .. than line 5, the dependent must

Married* 2. Minimum amount . . . . . . . . . .. $ 850 file an income tax return. If the

Under 65 and not blind . ....... $5,150 3. Compare lines 1 and 2. Enter dependent is married and his or

Either 65 or older or blind ....... $6,150 the larger amount . . . . . . . . .. her spouse itemizes deductions

65 or older and blind . . . ....... $7,150 4. Maximum amount . . . . . . . . .. 5,150 on a separate return, the

dependent must file an income

*If a dependent’s spouse itemizes deductions on a 5. Compare lines 3 and 4. Enter tax return if line 6 is $5 or more. $ 3,350

separate return, the dependent must file a return if the smaller amount . . . . . . . . .

the dependent has $5 or more of gross income

(earned and/or unearned).

6. Enter the dependent’s gross

(total) income. If line 6 is more

than line 5, the dependent must Age 65 or older or blind. A dependent

Example. William is 16. His mother claims file an income tax return. If the who is age 65 or older or blind must file

an exemption for him on her income tax return. dependent is married and his or a return if his or her gross (total) in-

He worked part time on weekends during the her spouse itemizes deductions come is more than line 7 of the following work-

school year and full time during the summer. He on a separate return, the sheet.

earned $5,600 in wages. He did not have any dependent must file an income

tax return if line 6 is $5 or more.

unearned income. Filing Requirement Worksheet

He must file a tax return because he has for Dependents

earned income only and his total income is more Who Are Age 65 or Older or Blind

than $5,150. If he were blind, he would not have Example 1. Joe is 20, single, not blind, and 1. Enter dependent’s earned

to file a return because his total income is not a full-time college student. His parents provide income plus $300 . . . . . . . . . . . .

more than $6,400. most of his support and claim an exemption for 2. Minimum amount . . . . . . . . . . . . $ 850



Publication 929 (2006) Page 3

3. Compare lines 1 and 2. Enter Other Filing Requirements

the larger amount . . . . . . . . . .

4. Maximum amount . . . . . . . . . .

.

. 5,150

Responsibility for

Some dependents may have to file a tax return

5. Compare lines 3 and 4. Enter

the smaller amount . . . . . . . . . .

even if their income is below the amount that Child’s Return

would normally require them to file a return.

6. Enter the amount from the Generally, the child is responsible for filing his or

following table that applies to the A dependent must file a tax return if he or

her own tax return and for paying any tax, penal-

dependent . . . . . . . . . . . . . . . . she owes any other taxes, such as:

ties, or interest on that return. If a child cannot

Marital Status Amount • Social security and Medicare taxes on tips file his or her own return for any reason, such as

Single not reported to his or her employer, age, the child’s parent or guardian is responsible

Either 65 or older or $1,250 • Uncollected social security and Medicare for filing a return on his or her behalf.

blind or railroad retirement taxes on tips re-

65 or older and blind $2,500 Signing the child’s return. If the child cannot

ported to his or her employer or on

Married sign his or her return, a parent or guardian can

group-term life insurance, sign the child’s name in the space provided at

Either 65 or older or $1,000

blind • Alternative minimum tax, the bottom of the tax return. Then, he or she

65 or older and blind $2,000 • Recapture taxes, such as the tax from re- should add: “By (signature), parent (or guardian)

capture of an education credit, or for minor child.”

• Tax on a qualified plan, including an indi- Authority of parent or guardian. A parent or

7. Add lines 5 and 6. Enter the total

vidual retirement arrangement (IRA), or guardian who signs a return on a child’s behalf

8. Enter the dependent’s gross (total)

income. If line 8 is more than line 7, other tax-favored account. But if the de- can deal with the IRS on all matters connected

the dependent must file an income pendent is filing a return only because of with the return.

tax return. If the dependent is this tax, the dependent can file Form 5329 In general, a parent or guardian who does

married and his or her spouse by itself. not sign the child’s return can only provide infor-

itemizes deductions on a separate mation concerning the child’s return and pay the

return, the dependent must file an A dependent must also file a tax return if he child’s tax. That parent or guardian is not entitled

income tax return if line 8 is $5 or or she: to receive information from the IRS or legally

more. . . . . . . . . . . . . . . . . . . . . bind the child to a tax liability arising from the

• Received any advance earned income

return.

credit payments from his or her employers

Example 3. The facts are the same as in in 2006, Third party designee. A child’s parent or

Example 2 except that Joe is also blind. He does guardian who does not sign the child’s return

not have to file a return because his total income • Had wages of $108.28 or more from a may be authorized, as a third party designee, to

of $3,350 is not more than $4,300, the amount church or qualified church-controlled or- discuss the processing of the return with the IRS

on line 7 of his filled-in Filing Requirement Work- ganization that is exempt from employer as well as provide information concerning the

sheet for Dependents Who Are Age 65 or Older social security and Medicare taxes, or return. The child or the person signing the return

or Blind (shown next). • Had net earnings from self-employment of on the child’s behalf must check the “Yes” box in

at least $400. the “Third Party Designee” area of the return and

Filing Requirement Worksheet name the parent or guardian as the designee.

for Dependents If designated, a parent or guardian can re-

Who Are Age 65 or Older or Blind Spouse itemizes. A dependent must file a spond to certain IRS notices and receive infor-

1. Enter dependent’s earned return if the dependent’s spouse itemizes de- mation about the processing of the return and

income plus $300 . . . . . . . . . . . . $3,050 ductions on a separate return and the depen- the status of a refund or payment. This designa-

2. Minimum amount . . . . . . . . . . . . 850 dent has $5 or more of gross income (earned tion does not authorize the parent or guardian to

3. Compare lines 1 and 2. Enter and/or unearned). receive any refund check, bind the child to any

the larger amount . . . . . . . . . . . 3,050 tax liability, or otherwise represent the child

4. Maximum amount . . . . . . . . . . . 5,150 before the IRS. See the return instructions for

5. Compare lines 3 and 4. Enter more information.

the smaller amount . . . . . . . . . . 3,050

6. Enter the amount from the Should a Return Be Designated as representative. A parent or

following table that applies to the guardian who does not sign the child’s return

dependent . . . . . . . . . . . . . . . . 1,250 Filed Even If Not may be designated as the child’s representative

by the child or the person signing the return on

Marital Status

Single

Amount Required? the child’s behalf. Form 2848, Power of Attorney

and Declaration of Representative, is used to

Either 65 or older or $1,250 designate a child’s representative. See Publica-

Even if a dependent does not meet any of the

blind

filing requirements discussed earlier, he or she tion 947, Practice Before the IRS and Power of

65 or older and blind $2,500

should file a tax return if either of the following Attorney, for more information.

Married

applies. If designated, a parent or guardian can re-

Either 65 or older or $1,000

blind • Income tax was withheld from his or her ceive information about the child’s return but

65 or older and blind $2,000 cannot legally bind the child to a tax liability

income.

unless authorized to do so by the law of the state

7. Add lines 5 and 6. Enter the total 4,300 • He or she qualifies for the earned income in which the child lives.

8. Enter the dependent’s gross (total) credit, the additional child tax credit, the

income. If line 8 is more than line health coverage tax credit, or the credit for IRS notice. If you or the child receives a

7, the dependent must file an federal telephone excise tax paid. See the notice from the IRS concerning the child’s return

income tax return. If the dependent tax return instructions to find out who qual- or tax liability, you should immediately inform the

is married and his or her spouse IRS that the notice concerns a child. The notice

ifies for these credits. (If the dependent is

itemizes deductions on a separate will show who to contact. The IRS will try to

return, the dependent must file an not required to file and is filing only to get

resolve the matter with the parent(s) or guard-

income tax return if line 8 is $5 or a credit for federal telephone excise tax ian(s) of the child consistent with their authority.

more. . . . . . . . . . . . . . . . . . . . . $3,350 paid, he or she can file using Form

1040EZ-T, Request for Refund of Federal Child’s earnings. For federal income tax pur-

Telephone Excise Tax.) poses, the income a child receives for his or her

personal services (labor) is the child’s, even if,

By filing a return, the dependent can get a re- under state law, the parent is entitled to and

fund. receives that income.



Page 4 Publication 929 (2006)

Table 2. Standard Deduction (her earned income plus $300) on line 1 of Table

Worksheet for Dependents Keep for Your Records 2. She enters $2,300 (the larger of $2,300 or

$850) on line 3, $5,150 on line 4, and $2,300

Use this worksheet only if someone can claim you (or your spouse, if filing jointly) as a (the smaller of $2,300 or $5,150) on line 5a.

dependent. Because Amy is blind, she checks the box for

blindness and enters “1” in box c at the top of

If you were 65 or older and/or blind, check the correct number of boxes below. Put the total Table 2. She enters $1,250 (the number in box c

number of boxes checked in box c and go to line 1. times $1,250) on line 5b. Her standard deduc-

tion on line 5c is $3,550 ($2,300 + $1,250).

a. You 65 or older Blind

b. Your spouse, if claiming Standard Deduction

spouse’s exemption 65 or older Blind

of Zero

c. Total boxes checked

The standard deduction for the following de-

pendents is zero.

1. Enter your earned income (defined below) plus $300. If none, enter

-0-. 1. • A married dependent filing a separate re-

turn whose spouse itemizes deductions.

2. Minimum amount. 2. $850 • A dependent who files a return for a period

of less than 12 months due to a change in

3. Compare lines 1 and 2. Enter the larger of the two amounts here. 3. his or her annual accounting period.

• A nonresident or dual-status alien depen-

4. Enter on line 4 the amount shown below for your filing status. dent, unless the dependent is married to a

U.S. citizen or resident alien at the end of

• Single or Married filing separately — $5,150 the year and chooses to be treated as a

• Married filing jointly or qualifying widow(er) with U.S. resident for the year. See Publication

dependent child — $10,300

519, U.S. Tax Guide for Aliens, for infor-

• Head of household — $7,550 4. mation on making this choice.

5. Standard deduction.

a. Compare lines 3 and 4. Enter the smaller amount here. If under 65 5a. Example. Jennifer, who is a dependent of

and not blind, stop here. This is your standard deduction. Otherwise, her parents, is entitled to file a joint return with

go on to line 5b. her husband. However, her husband elects to

b. If 65 or older or blind, multiply $1,250 ($1,000 if married or qualifying 5b. file a separate return and itemize his deductions.

widow(er) with dependent child) by the number in box c above. Enter Because he itemizes, Jennifer’s standard de-

the result here. duction on her return is zero. She can, however,

c. Add lines 5a and 5b. This is your standard deduction for 2006. 5c. itemize any of her allowable deductions.



Earned income includes wages, salaries, tips, professional fees, and other compensation

received for personal services you performed. It also includes any amount received as a

scholarship that you must include in income. Dependent’s

Own Exemption

If the child does not pay the tax due on this Certain dependents cannot claim any stan-

dard deduction. See Standard Deduction of A person who can be claimed as a dependent on

income, the parent may be liable for the tax.

Zero, later. another taxpayer’s return cannot claim his or her

own exemption. This is true even if the other

Child’s expenses. Deductions for payments taxpayer does not actually claim the exemption.

Table 2. Use Table 2 to figure the dependent’s

that are made out of a child’s earnings are the

standard deduction. Example. James and Barbara can claim

child’s, even if the payments are made by the

parent. their child, Ben, as a dependent on their return.

Example 1. Michael is single, age 15, and Ben is a full-time college student who works

not blind. His parents can claim him as a depen- during the summer and must file a tax return.

Example. You made payments on your

dent on their tax return. He has taxable interest Ben cannot claim his own exemption on his

child’s behalf that are deductible as a business

income of $800 and wages of $150. He enters return. This is true even if James and Barbara do

expense and a charitable contribution. You $450 (his earned income plus $300) on line 1 of not claim him as a dependent on their return.

made the payments out of your child’s earnings. Table 2. On line 3, he enters $850, the larger of

These items can be deducted only on the child’s $450 or $850. Michael enters $5,150 on line 4.

return. On line 5a, he enters $850, the smaller of $850

or $5,150. His standard deduction is $850.

Withholding

Example 2. Judy, a full-time student, is sin-

From Wages

Standard Deduction gle, age 22, and not blind. Her parents can claim

her as a dependent on their tax return. She has

Employers generally withhold federal income

dividend income of $275 and wages of $2,500.

The standard deduction for an individual who tax, social security tax, and Medicare tax from

She enters $2,800 (her earned income plus

can be claimed as a dependent on another an employee’s wages. If the employee claims

$300) on line 1 of Table 2. On line 3, she enters

person’s tax return is generally limited to the exemption from withholding on Form W-4, the

$2,800, the larger of $2,800 or $850. She enters

larger of: employer will not withhold federal income tax.

$5,150 on line 4. On line 5a, she enters $2,800

The exemption from withholding does not apply

1. $850, or (the smaller of $2,800 or $5,150) as her stan-

to social security and Medicare taxes.

2. The individual’s earned income plus $300, dard deduction.

but not more than the regular standard de-

duction (generally $5,150). Example 3. Amy, who is single, is claimed Conditions for exemption from withholding.

as a dependent on her parents’ tax return. She is An employee can claim exemption from with-

However, the standard deduction for a depen- 18 and blind. She has taxable interest income of holding for 2007 only if he or she meets both of

dent who is age 65 or older or blind is higher. $1,000 and wages of $2,000. She enters $2,300 the following conditions.



Publication 929 (2006) Page 5

1. For 2006, the employee had a right to a Capital gain distribution Parents not living together. If the child’s

refund of all federal income tax withheld Dependent parents are married to each other but not living

because he or she had no tax liability. Earned income together, and the parent with whom the child

2. For 2007, the employee expects a refund Gross income lives (the custodial parent) is considered unmar-

of all federal income tax withheld because ried, use the return of the custodial parent. If the

Investment income

he or she expects to have no tax liability. custodial parent is not considered unmarried,

Itemized deductions

use the return of the parent with the greater

Net capital gain taxable income.

Dependents. An employee who is a depen-

Net investment income For an explanation of when a married person

dent ordinarily cannot claim exemption from

withholding if both of the following are true. Qualified dividends living apart from his or her spouse is considered

• The employee’s total income will be more Standard deduction unmarried, see Head of Household in Publica-

than the minimum standard deduction Tax year tion 501.

amount. This amount was $850 for 2006, Taxable income

but may be higher for 2007. Check the Unearned income Parents are divorced. If the child’s parents

instructions for the 2007 Form W-4 for the Unrecaptured section 1250 gain are divorced or legally separated, and the parent

correct amount. 28% rate gain who had custody of the child for the greater part

• The employee’s unearned income will be of the year (the custodial parent) has not remar-

more than $300. ried, use the return of the custodial parent.

The two rules that follow may affect the tax on Custodial parent remarried. If the custo-

Exceptions. An employee who is age 65 or certain investment income of a child under age dial parent has remarried, the stepparent (rather

older or blind, or who will claim adjustments to 18. than the noncustodial parent) is treated as the

income, itemized deductions, or tax credits on 1. If the child’s interest and dividend income child’s other parent. Therefore, if the custodial

his or her 2007 tax return, may be able to claim (including capital gain distributions) total parent and the stepparent file a joint return, use

exemption from withholding even if the em- less than $8,500, the child’s parent may be that joint return. Do not use the return of the

ployee is a dependent. For more information, able to choose to include that income on noncustodial parent.

see the discussions under Exemption From the parent’s return rather than file a return If the custodial parent and the stepparent are

Withholding in chapter 1 of Publication 505, Tax for the child. (See Parent’s Election To Re- married, but file separate returns, use the return

Withholding and Estimated Tax. port Child’s Interest and Dividends, later.) of the one with the greater taxable income. If the

2. If the child’s interest, dividends, and other custodial parent and the stepparent are married

Example. Guy is 17 and a student. During investment income total more than $1,700, but not living together, the earlier discussion

the summer he works part time at a grocery part of that income may be taxed at the under Parents not living together applies.

store. He expects to earn about $1,000 this year. parent’s tax rate instead of the child’s tax

He also worked at the store last summer and rate. (See Tax for Children Under Age 18

received a refund of all his withheld income tax Parents never married. If a child’s parents

Who Have Investment Income of More did not marry each other, but lived together all

because he did not have a tax liability. The only Than $1,700, later.)

other income he expects during the year is $375 year, use the return of the parent with the

interest on a savings account. He expects that For these rules, the term “child” includes a greater taxable income. If the parents did not live

his parents will be able to claim him as a depen- legally adopted child and a stepchild. These together all year, the rules explained earlier

dent on their tax return. He is not blind and will rules apply whether or not the child is a depen- under Parents are divorced apply.

not claim adjustments to income, itemized de- dent.

ductions, or tax credits on his return. These rules do not apply if: Widowed parent remarried. If a widow or

Guy cannot claim exemption from withhold- • The child is not required to file a tax return widower remarries, the new spouse is treated as

ing when he fills out Form W-4 because his (see Filing Requirements in Part 1), the child’s other parent. The rules explained

earlier under Custodial parent remarried apply.

parents will be able to claim him as a dependent, • Neither of the child’s parents were living at

his total income will be more than $850, the the end of the tax year, or

minimum standard deduction amount, and his • The child files a joint return for the year.

unearned income will be more than $300.

Parent’s Election

Claiming exemption from withholding. To Which Parent’s

claim exemption from withholding, an employee

Return To Use To Report Child’s

must enter “Exempt” in the space provided on

Form W-4, line 7. The employee must complete If a child’s parents are married to each other and Interest and Dividends

the rest of the form, as explained in the form file a joint return, use the joint return to figure the

instructions, and give it to his or her employer. tax on the investment income of a child under You may be able to elect to include your child’s

18. The tax rate and other return information interest and dividend income (including capital

Renewing an exemption from withholding. gain distributions) on your tax return. If you do,

An exemption from withholding is good for only from that return are used to figure the child’s tax

as explained later under Tax for Children Under your child will not have to file a return.

one year. An employee must file a new Form

Age 18 Who Have Investment Income of More You can make this election for 2006 only if

W-4 by February 15 each year to continue the

Than $1,700. all the following conditions are met.

exemption.

• Your child was under age 18 at the end of

2006. (A child born on January 1, 1989, is

Parents Who Do Not File a Joint considered to be age 18 at the end of

Part 2. Tax on Return 2006; you cannot make the election for

this child.)

Investment Income For parents who do not file a joint return, the • Your child had income only from interest

following discussions explain which parent’s tax and dividends (including capital gain distri-

of Child Under 18 return must be used to figure the tax.

Only the parent whose tax return is used can

butions and Alaska Permanent Fund divi-

dends).

make the election described under Parent’s

Terms you may need to know • The dividend and interest income was less

(see Glossary): Election To Report Child’s Interest and Divi-

than $8,500.

dends.

• Your child is required to file a return for

Adjusted gross income Parents are married. If the child’s parents file 2006 unless you make this election.

Adjustments to income separate returns, use the return of the parent • The child does not file a joint return for

Alternative minimum tax with the greater taxable income. 2006.



Page 6 Publication 929 (2006)

• No estimated tax payment was made for Figure 1. Can You Include Your Child’s Income On Your Tax

2006 and no 2005 overpayment was ap- Return?

plied to 2006 under your child’s name and

social security number. Start Here

• No federal income tax was taken out of Was your child under age 18 at No

your child’s income under the backup with- the end of 2006?

holding rules.

• You are the parent whose return must be Yes

used when applying the special tax rules

for children under age 18. (See Which

Parent’s Return To Use, earlier.) Is your child required to file a tax return for No

2006 if you do not make this election?

These conditions are also shown in Figure 1.

Yes

How to make the election. Make the election

by attaching Form 8814 to your Form 1040 or

Form 1040NR. (If you make this election, you Yes

Is your child filing a joint return for 2006?

cannot file Form 1040A or Form 1040EZ.) At-

tach a separate Form 8814 for each child for

whom you make the election. You can make the No

election for one or more children and not for

others. Was the child’s only income interest and

dividends (including capital gain No

Effect of Making distributions and Alaska Permanent Fund

dividends)?

the Election

Yes

The federal income tax on your child’s income

may be more if you make the Form 8814 elec-

tion. Was the child’s income less than No

$8,500?

Rate may be higher. If your child received

qualified dividends or capital gain distributions, Yes

you may pay up to $42.50 more tax if you make

this election instead of filing a separate tax re-

turn for the child. This is because the tax rate on Did the child make any estimated tax Yes

the child’s income between $850 and $1,700 is payments for 2006?

10% if you make this election. However, if you

file a separate return for the child, the tax rate No

may be as low as 5% because of the preferential

tax rates for qualified dividends and capital gain

distributions. Did the child have an overpayment of tax Yes

on his or her 2005 return applied to the

Deductions you cannot take. By making the 2006 estimated tax?

Form 8814 election, you cannot take any of the

following deductions that the child would be No

entitled to on his or her return.

• The higher standard deduction for a blind Was any federal income tax withheld from Yes

child. the child’s income (backup withholding)?

• The deduction for a penalty on an early

withdrawal of your child’s savings. No

• Itemized deductions (such as your child’s

investment expenses or charitable contri-

Are you the parent whose return must be No

butions).

used?*



Deductible investment interest. If you use Yes

Form 8814, your child’s investment income is

considered your investment income. To figure

the limit on your deductible investment interest, You can include your child’s income on

add the child’s investment income to yours. You cannot include

your tax return by completing Form 8814

your child’s income

However, if your child received qualified divi- and attaching it to your return. If you do,

on your return.

dends, capital gain distributions, or Alaska Per- your child is not required to file a return.

manent Fund dividends, see chapter 3 of

Publication 550, Investment Income and Ex-

penses, for information about how to figure the

limit. *See Which Parent’s Return To Use



Alternative minimum tax. If your child re-

ceived tax-exempt interest from a private activity

Reduced deductions or credits. If you use • Itemized deductions for medical expenses,

Form 8814, your increased adjusted gross in- casualty and theft losses, and certain mis-

bond, you must determine if that interest is a tax

come may reduce certain deductions or credits cellaneous expenses.

preference item for alternative minimum tax

(AMT) purposes. If it is, you must include it with

on your return, including the following. • Total itemized deductions.

your own tax preference items when figuring • Deduction for contributions to a traditional • Personal exemptions.

your AMT. For more information, get the instruc- individual retirement arrangement (IRA). • Credit for child and dependent care ex-

tions for Form 6251, Alternative Minimum Tax — • Deduction for student loan interest. penses.

Individuals. • Child tax credit.



Publication 929 (2006) Page 7

• Education tax credits. Include the amount from Form 8814, line 10, their Schedule D, line 13, and the amount to

• Earned income credit. on Schedule D (Form 1040), line 13; Form 1040, report on Form 1040, line 21, as follows.

line 13; or Form 1040NR, line 14, whichever They leave lines 1a and 1b of Form 8814

applies. (The amount on Form 8814, line 10, blank because Fred does not have any interest

Penalty for underpayment of estimated tax.

may be less than the amount on Form 8814, line income. They enter his ordinary dividends of

If you make this election for 2006 and did not

have enough tax withheld or pay enough esti- 3, because lines 7 through 12 of the form divide $1,480 on line 2b because all of Fred’s ordinary

mated tax to cover the tax you owe, you may be the $1,700 base amount on Form 8814, line 5,

dividends are qualified dividends. They enter the

subject to a penalty. If you plan to make this between the child’s qualified dividends, capital

amount of Fred’s capital gain distributions,

election for 2007, you may need to increase your gain distributions, and other interest and divi-

$420, on line 3. Next, they add the amounts on

federal income tax withholding or your estimated dend income, reducing each of those amounts.)

lines 1a, 2a, and 3 and enter the result, $1,900,

tax payments to avoid the penalty. Get Publica- Collectibles (28% rate) gain. If any of the on line 4.

tion 505 for more information. child’s capital gain distributions are reported on They subtract the base amount on line 5,

Form 1099-DIV as collectibles (28% rate) gain,

$1,700, from the amount on line 4, $1,900, and

Figuring Child’s Income you must determine how much to also include

enter the result, $200, on line 6. This is the total

on line 4 of the 28% Rate Gain Worksheet, in the

Use Form 8814, Part I, to figure your child’s amount from Form 8814 to be reported on their

instructions for line 18, Schedule D. Multiply the

interest and dividend income to report on your return. Next, they figure how much of this

child’s capital gain distribution included on

return. Only the amount over $1,700 is added to amount qualified dividends and how much is

Schedule D, line 13, by a fraction. The numera-

your income. The amount over $1,700 is shown capital gain distributions.

tor is the part of the child’s total capital gain

on Form 8814, line 12. Unless the child’s income distribution that is collectibles (28% rate) gain. • They divide the amount on line 2b, $1,480,

includes qualified dividends or capital gain distri- The denominator is the child’s total capital gain by the amount on line 4, $1,900. They

butions (discussed next), the same amount is distribution. Enter the result on line 4 of the 28% enter the result, .779, on line 7.

shown on Form 8814, line 12. Include the Rate Gain Worksheet.

amount from Form 8814, line 12, on Form 1040 • They divide the amount on line 3, $420, by

or Form 1040NR, line 21. If you file more than Unrecaptured section 1250 gain. If any of the amount on line 4, $1,900. They enter

one Form 8814, include the total amounts from the child’s capital gain distributions are reported the result, .221, on line 8.

line 12 of all your Forms 8814 on Form 1040 or on Form 1099-DIV as unrecaptured section

Form 1040NR, line 21. In the space next to line 1250 gain, you must determine how much to • They multiply the amount on line 6, $200,

21, enter “Form 8814” and the total of the Form include on line 11 of the Unrecaptured Section by the decimal on line 7, .779, and enter

8814, line 12 amounts. 1250 Gain Worksheet in the instructions for line the result, $156 on line 9.

19 of Schedule D. Multiply the child’s capital • They multiply the amount on line 6, $200,

Note. The tax on the first $1,700 is figured gain distribution included on Schedule D, line by the decimal on line 8, .221, and enter

on Form 8814, Part II. See Figuring Additional 13, by a fraction. The numerator is the part of the the result, $44, on line 10.

Tax, later. child’s total capital gain distribution that is unre-

captured section 1250 gain. The denominator is • They include the amount from line 9,

Qualified dividends. Enter on Form 8814, the child’s total capital gain distribution. Enter $156, on lines 9a and 9b of their Form

line 2a, any ordinary dividends your child re- the result on line 11 of the Unrecaptured Section 1040 and enter “Form 8814 – $156” on

ceived. This amount may include qualified divi- 1250 Gain Worksheet. the dotted lines next to lines 9a and 9b.

dends. Qualified dividends are those dividends They include the amount from line 10,

reported on Form 1040, line 9b, or Form Section 1202 gain. If any of the child’s capi- $44, on line 13 of their Schedule D (Form

1040NR, line 10b, and are eligible for the lower tal gain distributions are reported as section 1040) and enter “Form 8814 – $44” on the

tax rates that apply to a net capital gain. For 1202 gain (gain on qualified small business dotted line next to line 13 of Schedule D.

detailed information about qualified dividends, stock) on Form 1099-DIV, part or all of that gain

see Publication 550, Investment Income and may be eligible for the section 1202 exclusion. They enter $200 ($156 + $44) on line 11 and

Expenses. (For information about the exclusion, see chap- -0- ($200 – $200) on line 12. Because the

If your child received qualified dividends, the ter 4 of Publication 550.) To figure that part, amount on line 12 is -0-, they do not include any

amount of these dividends that is added to your multiply the child’s capital gain distribution in- amount from Form 8814 on line 21 of their Form

income must be reported on Form 1040, lines 9a cluded on Schedule D, line 13, by a fraction. The 1040.

and 9b, or Form 1040NR, lines 10a and 10b. numerator is the part of the child’s total capital

You do not include these dividends on Form gain distribution that is section 1202 gain. The

8814, line 12, or on line 21 of Form 1040, or denominator is the child’s total capital gain distri- Figuring Additional Tax

Form 1040NR. bution. Your section 1202 exclusion is generally Use Form 8814, Part II, to figure the tax on the

Enter the child’s qualified dividends on Form 50% of the result, but may be subject to a limit. $1,700 of your child’s interest and dividends that

8814, line 2b. But do not include this amount on See the instructions for Schedule D for details

Form 1040, lines 9a and 9b, or Form 1040NR, you do not include in your income. This tax is

and for information on how to report the exclu-

lines 10a and 10b. Instead, include the amount added to the tax figured on your income.

sion amount.

from Form 8814, line 9, on Form 1040, lines 9a This additional tax is the smaller of:

and 9b, or Form 1040NR, lines 10a and 10b. Example. Fred is 6 years old. In 2006, he

(The amount on Form 8814, line 9, may be less 1. 10% x (your child’s gross income − $850),

received dividend income of $1,900, which in-

than the amount on Form 8814, line 2b, because or

cluded $1,480 of ordinary dividends and a $420

lines 7 through 12 of the form divide the $1,700 capital gain distribution from a mutual fund. 2. $85.

base amount on Form 8814, line 5, between the (None of the distributions were reported on

child’s qualified dividends, capital gain distribu- Form 1099-DIV as unrecaptured section 1250 Include the amount from line 15 of all

tions, and other interest and dividend income,

reducing each of those amounts.)

gain, section 1202 gain, or collectibles (28% ! your Forms 8814 in the total on Form

rate) gain.) All of the ordinary dividends are CAUTION

1040, line 44, or Form 1040NR, line 41.

qualified dividends. He has no other income and Check box a on Form 1040, line 44, or Form

Capital gain distributions. Enter on Form

is not subject to backup withholding. No esti- 1040NR, line 41.

8814, line 3, any capital gain distributions your

child received. The amount of these distributions mated tax payments were made under his name

that is added to your income must be reported and social security number. Illustrated Example

on Schedule D (Form 1040), line 13, or, if you Fred’s parents elect to include Fred’s income

are not required to file Schedule D, on Form on their tax return instead of filing a return for David and Linda Parks are married and will file

1040, line 13, or Form 1040NR, line 14. You do him. separate tax returns for 2006. Their only child,

not include it on Form 8814, line 12, or on line 21 They figure the amount to report on Form Philip, is 8. Philip received a Form 1099-INT

of Form 1040 or Form 1040NR. 1040, lines 9a and 9b, the amount to report on showing $1,650 taxable interest income and a



Page 8 Publication 929 (2006)

OMB No. 1545-0074

Form 8814 Parents’ Election To Report

Child’s Interest and Dividends 2006

Department of the Treasury

See instructions. Attachment

Internal Revenue Service Attach to parents’ Form 1040 or Form 1040NR. Sequence No. 40

Name(s) shown on your return Your social security number

Linda Parks 111 00 1111

Caution. The federal income tax on your child’s income, including qualified dividends and capital gain distributions, may be less

if you file a separate tax return for the child instead of making this election. This is because you cannot take certain tax benefits

that your child could take on his or her own return. For details, see Tax benefits you cannot take on page 2.

A Child’s name (first, initial, and last) B Child’s social security number

Phillip Parks 000 00 0000



C If more than one Form 8814 is attached, check here



Part I Child’s Interest and Dividends To Report on Your Return



1a Enter your child’s taxable interest. If this amount is different from the amounts shown on the

child’s Forms 1099-INT and 1099-OID, see the instructions 1a 1,650

b Enter your child’s tax-exempt interest. Do not include this

amount on line 1a 1b

2a Enter your child’s ordinary dividends, including any Alaska Permanent Fund dividends. If your

child received any ordinary dividends as a nominee, see the instructions 2a 1,150

b Enter your child’s qualified dividends included on line 2a. See the

instructions 2b 1,150

3 Enter your child’s capital gain distributions. If your child received any capital gain distributions

as a nominee, see the instructions 3

4 Add lines 1a, 2a, and 3. If the total is $1,700 or less, skip lines 5 through 12 and go to line 13.

If the total is $8,500 or more, do not file this form. Your child must file his or her own return

to report the income 4 2,800

5 Base amount 5 1,700 00

6 Subtract line 5 from line 4 6 1,100

If both lines 2b and 3 are zero or blank, skip lines 7 through 10, enter -0- on line 11, and

go to line 12. Otherwise, go to line 7.

7 Divide line 2b by line 4. Enter the result as a decimal (rounded

to at least three places) 7 . 411

8 Divide line 3 by line 4. Enter the result as a decimal (rounded to

at least three places) 8 .

9 Multiply line 6 by line 7. Enter the result here. See the instructions

for where to report this amount on your return 9 452

10 Multiply line 6 by line 8. Enter the result here. See the instructions

for where to report this amount on your return 10

11 Add lines 9 and 10 11 452

12 Subtract line 11 from line 6. Include this amount in the total on Form 1040, line 21, or Form

1040NR, line 21. In the space next to line 21, enter “Form 8814” and show the amount. If you

checked the box on line C above, see the instructions. Go to line 13 below 12 648

Part II Tax on the First $1,700 of Child’s Interest and Dividends



13 Amount not taxed 13 850 00

14 Subtract line 13 from line 4. If the result is zero or less, enter -0- 14 1,950

15 Tax. Is the amount on line 14 less than $850?

No. Enter $85 here and see the Note below. 15 85

Yes. Multiply line 14 by 10% (.10). Enter the result here and see the Note below.

Note. If you checked the box on line C above, see the instructions. Otherwise, include the amount from line 15 in the tax you enter

on Form 1040, line 44, or Form 1040NR, line 41. Be sure to check box a on Form 1040, line 44, or Form 1040NR, line 41.

For Paperwork Reduction Act Notice, see page 3. Cat. No. 10750J Form 8814 (2006)









Publication 929 (2006) Page 9

Form 1099-DIV showing $1,150 ordinary divi- dividends, to her income increases each of the

dends. All the dividends were qualified divi-

dends. His parents decide to include that

amounts on lines 22, 37, 38, 41, and 43 of her

Form 1040 by $1,100. Linda is not claiming any

Tax for Children Under

income on one of their returns so they will not

have to file a return for Philip.

deductions that are affected by the increase to

her income. Therefore, her revised taxable in-

Age 18 Who Have

First, David and Linda each figure their tax- come on line 43 is $75,400 ($74,300 + $452 +

$648).

Investment Income

able income (Form 1040, line 43) without regard

to Philip’s income. David’s taxable income is On Form 8814, Linda subtracts the $850 of More Than $1,700

$56,700 and Linda’s is $74,300. Because her shown on line 13 from the $2,800 on line 4 and

taxable income is greater, Linda can elect to enters the result, $1,950, on line 14. Because Part of a child’s 2006 investment income may be

include Philip’s income on her return. (See that amount is not less than $850, she enters subject to tax at the parent’s tax rate if all of the

Which Parent’s Return To Use, earlier.) $85 on line 15. This is the tax on the first $1,700 following statements are true.

of Philip’s income, which Linda did not have to

On Form 8814 (illustrated on the previous

add to her income. She must add this additional • The child was under age 18 at the end of

page), Linda enters her name and social secur- 2006. (A child born on January 1, 1989, is

ity number, then Philip’s name and social secur- tax to the tax figured on her revised taxable

income. considered to be age 18 at the end of

ity number. She enters Philip’s taxable interest 2006; this child’s investment income is not

income, $1,650, on line 1a. Philip had no The tax on her $75,400 revised taxable in-

come, figured using the Qualified Dividends and taxed at the parent’s tax rate.)

tax-exempt interest income, so she leaves line

1b blank. Linda enters Philip’s ordinary divi- Capital Gain Tax Worksheet in the Form 1040 • The child’s investment income was more

dends, $1,150, on line 2a. All of Philip’s ordinary instructions, is $15,749. She adds $85, and en- than $1,700.

dividends were qualified dividends, so Linda ters the $15,834 total on Form 1040, line 44, and

checks box a. • The child is required to file a tax return for

also enters $1,150 on line 2b. Philip did not have 2006.

any capital gain distributions, so she leaves line Linda attaches Form 8814 to her Form 1040.

3 blank. • The child does not file a joint return for

Linda adds lines 1a and 2a and enters the 2006.

result, $2,800, on line 4. Because Philip had These conditions are also shown in Figure 2.

qualified dividends, Linda must complete lines 7

through 11 of Form 8814. She includes the If neither parent was alive on December 31,

amount from line 9 of Form 8814 ($452) on lines 2006, do not use Form 8615. Instead, figure the

9a and 9b of her Form 1040. On the dotted lines child’s tax in the normal manner.

next to lines 9a and 9b, she enters “Form If the parent does not or cannot choose to

8814 – $452.” include the child’s income on the parent’s return,

Linda includes $648 in the total on line 21 of use Form 8615 to figure the child’s tax. Attach

her Form 1040 (not illustrated) and in the space the completed form to the child’s Form 1040,

next to that line writes “Form 8814 – $648.” Ad- Form 1040A, or Form 1040NR.

ding that amount, plus the $452 of qualified The following discussions explain the paren-

tal information needed for Form 8615 and the

Figure 2. Do You Have To Use Form 8615 To Figure Your steps to follow in figuring the child’s tax.

Child’s Tax?

Start Here Providing Parental

Was the child under age 18 at the end of 2006?

No Information (Form 8615,

Lines A–C)

Yes

On Form 8615, lines A and B, enter the parent’s

name and social security number. (If the parents

filed a joint return, enter the name and social

No

Is the child required to file a tax return for 2006? security number listed first on the joint return.)

On line C, check the box for the parent’s filing

Yes status.

See Which Parent’s Return To Use, earlier,

for information on which parent’s return informa-

Yes tion must be used on Form 8615.

Is your child filing a joint return for 2006?

Parent with different tax year. If the parent

No

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

No the child’s tax year.

Was the child’s investment income more than $1,700?

Example. Kimberly must use her mother’s

Yes

tax and taxable income to complete her Form

8615 for calendar year 2006 (January 1 – De-

cember 31). Kimberly’s mother files her tax re-

turn on a fiscal year basis (July 1 – June 30).

Use Form 8615 to figure the child’s tax. Attach it to the

child’s return. Kimberly must use the information on her

mother’s return for the tax year ending June 30,

Note. If the child’s parent* chooses to report the child’s Do not use 2006, to complete her 2006 Form 8615.

income by filing Form 8814, the child is not required to file a Form 8615 to

tax return. Do not use Form 8615. (See Parent’s Election To figure the

Report Child’s Interest and Dividends.)

Parent’s return information not known

child’s tax. timely. If the information needed from the par-

ent’s return is not known by the time the child’s

return is due (usually April 15), you can file the

*See Which Parent’s Return To Use return using estimates.



Page 10 Publication 929 (2006)

You can use any reasonable estimate. This example, see the Illustrated Part I of Form 8615 child must include in total income. Nontaxable

includes using information from last year’s re- on the next page. investment income, such as tax-exempt interest

turn. If you use an estimated amount on Form and the nontaxable part of social security and

8615, enter “Estimated” on the line next to the pension payments, is not included.

amount. Line 1 (Investment Income)

Capital loss. A child’s capital losses are

When you get the correct information, file an

amended return on Form 1040X, Amended U.S. If the child had no earned income, enter on this taken into account in figuring the child’s invest-

Individual Income Tax Return. line the adjusted gross income shown on the ment income. Capital losses are first applied

child’s return. Adjusted gross income is shown against capital gains. If the capital losses are

Extension of time to file. Instead of using on Form 1040, line 38; Form 1040A, line 22; or more than the capital gains, the difference (up to

estimates, you can get an automatic 6-month Form 1040NR, line 36. Form 1040EZ and Form $3,000) is subtracted from the child’s interest,

extension of time to file if, by the date your return 1040NR-EZ cannot be used if Form 8615 must dividends, and other investment income. Any

is due, you file Form 4868, Application for Auto- be filed. difference over $3,000 is carried to the next

matic Extension of Time To File U.S. Individual

If the child had earned income, figure the year.

Income Tax Return. You can file a paper Form

amount to enter on Form 8615, line 1, by using

4868 or you can file it electronically. See the Income from property received as a gift.

the worksheet in the instructions for the form.

instructions for Form 4868 for details. A child’s investment income includes all income

However, use the following worksheet produced by property belonging to the child.

An extension of time to file is not an

if the child has excluded any foreign

! extension of time to pay. You must

earned income or deducted a loss from

This is true even if the property was transferred

to the child, regardless of when the property was

CAUTION

make an accurate estimate of the tax

self-employment or a net operating loss from transferred or purchased or who transferred it.

for 2006. If you do not pay the full amount due by

another year.

the regular due date, the child will owe interest A child’s investment income includes income

and may also be charged penalties. See Form produced by property given as a gift to the child.

4868 and its instructions. Alternate Worksheet

for Form 8615, Line 1 This includes gifts to the child from grandparents

or any other person and gifts made under the

Parent’s return information not available. If A. Enter the amount from the Uniform Gift to Minors Act.

a child cannot get the required information about child’s Form 1040, line 22, or

his or her parent’s tax return, the child (or the Form 1040NR, line 23 . . . . . . Example. Amanda Black, age 13, received

child’s legal representative) can request the B. Enter the total of any net loss the following income.

necessary information from the Internal Reve- from self-employment, any net

nue Service (IRS). operating loss deduction, any • Dividends — $600



How to request. After the end of the tax foreign earned income • Wages — $2,100

exclusion, and any foreign

year, send a signed, written request for the infor-

housing exclusion from the • Taxable interest — $1,200

mation to the Internal Revenue Service Center

where the parent’s return will be filed. (The IRS

child’s Form 1040 or Form • Tax-exempt interest — $100

1040NR. Enter this total as a

cannot process a request received before the positive number (greater than • Capital gains — $300

end of the tax year.) zero) . . . . . . . . . . . . . . . . .

• Capital losses — ($200)

You should also consider getting an C. Add line A and line B and

TIP extension of time to file the child’s re- The dividends were qualified dividends on stock

enter the total. . . . . . . . . . . .

turn, because there may be a delay in given to her by her grandparents.

getting the requested information. D. Enter the child’s earned

income plus any amount from Amanda’s investment income is $1,900. This

The request must contain all of the following. the child’s Form 1040, line 30 is the total of the dividends ($600), taxable inter-

• A statement that you are making the re- or the child’s Form 1040NR, est ($1,200), and capital gains reduced by capi-

quest to comply with section 1(g) of the line 29. . . . . . . . . . . . . . . . . tal losses ($300 − $200 = $100). Her wages are

Internal Revenue Code and that you have earned (not investment) income because they

tried to get the information from the par- Generally, the child’s earned are received for work actually done. Her

income is the total of the tax-exempt interest is not included because it is

ent.

amounts reported on Form

nontaxable.

• Proof the child is under 18 years of age 1040, lines 7, 12, and 18 (if line

(for example, a copy of the child’s birth 12 or 18 is a loss, use zero) or Trust income. If a child is the beneficiary of

certificate). Form 1040NR, lines 8, 13, and a trust, distributions of taxable interest, divi-

19 (if line 13 or 19 is a loss, dends, capital gains, and other investment in-

• Evidence the child has more than $1,700 use zero)

of unearned income (for example, a copy come from the trust are investment income to

of the child’s prior year tax return or copies E. Subtract line D from line C. the child.

of Forms 1099 for the current year). Enter the result here and on However, taxable distributions from a quali-

Form 8615, line 1 . . . . . . . . .

• The name, address, social security num- fied disability trust are considered earned in-

ber (if known), and filing status (if known) come for the purposes of completing Form

of the parent whose information is to be 8615. See the Form 8615 instructions for de-

shown on Form 8615. Investment income defined. Investment in- tails.

come is generally all income other than salaries, Adjustment to income. In figuring the

A child’s legal representative making the re- wages, and other amounts received as pay for amount to enter on line 1, the child’s investment

quest should include a copy of his or her Power work actually done. It includes taxable interest,

income is reduced by any penalty on the early

of Attorney, such as Form 2848, or proof of legal dividends, capital gains (including capital gain

withdrawal of savings.

guardianship. distributions), the taxable part of social security

and pension payments, and certain distributions

Step 1. Figuring the Child’s from trusts. Investment income includes Line 2 (Deductions)

amounts produced by assets the child obtained

Net Investment Income with earned income (such as interest on a sav- If the child does not itemize deductions on

(Form 8615, Part I) ings account into which the child deposited Schedule A (Form 1040 or Form 1040NR), enter

wages). $1,700 on line 2.

The first step in figuring a child’s tax using Form

8615 is to figure the child’s net investment in- Nontaxable income. For this purpose, in- If the child does itemize deductions, enter on

come. To do that, use Form 8615, Part I. For an vestment income includes only amounts the line 2 the larger of:



Publication 929 (2006) Page 11

Illustrated Part I of Form 8615

Carla’s total income on Form 1040A, line 15, line 1 of the worksheet. Her earned income Worksheet—Line 1

is $5,000. This total includes wages (earned of $600 (her wages as shown on line 7 of

1. Enter the amount from the

income) of $600 reported on line 7. She has her Form 1040A) is entered on line 2 of the

child’s Form 1040, line 22;

no itemized deductions. Carla’s taxable worksheet. Line 3 is the result of subtracting

Form 1040A, line 15; or Form

income on Form 1040A, line 27, is $4,100. $600 from $5,000. 1040NR, line 23, whichever

Because Carla has earned income, the The amount from line 3 of the worksheet applies 5,000

worksheet in the instructions is used to is entered on line 1 of Form 8615. Carla did 2. Enter the child’s earned income

figure the amount on line 1 of Form 8615. not itemize deductions, so $1,700 is entered plus the amount of any penalty

Carla’s filled-in worksheet and Part I of on line 2. Line 3 of Form 8615 is the result on early withdrawal of savings

her Form 8615, with lines 1 through 5 filled of subtracting $1,700 from $4,400. Carla’s from the child’s Form 1040, line

in, are shown here. taxable income of $4,100 (as shown on line 30; Form 1040A, line 16; or

Carla’s total income of $5,000 (as shown 27 of her Form 1040A) is entered on line 4 Form 1040NR, line 29,

on line 15 of her Form 1040A) is entered on of Form 8615. The smaller of $2,700 or whichever applies 600

$4,100 is entered on line 5. This is her net 3. Subtract line 2 from line 1.

investment income. Enter the result here and on

Form 8615, line 1 4,400

OMB No. 1545-0074

Form 8615 Tax for Children Under Age 18

With Investment Income of More Than $1,700 2006

Department of the Treasury

Attach only to the child’s Form 1040, Form 1040A, or Form 1040NR. Attachment

Internal Revenue Service (99) See separate instructions. Sequence No. 33

Child’s name shown on return Child’s social security number

Carla C. Rose 111 00 1111

Before you begin: If the child, the parent, or any of the parent’s other children under age 18 must use the Schedule D Tax

Worksheet or has income from farming or fishing, see Pub. 929, Tax Rules for Children and Dependents. It

explains how to figure the child’s tax using the Schedule D Tax Worksheet or Schedule J (Form 1040).

A Parent’s name (first, initial, and last). Caution: See instructions before completing. B Parent’s social security number

George B. Rose 123 00 4567

C Parent’s filing status (check one):

Single Married filing jointly Married filing separately Head of household Qualifying widow(er)

Part I Child’s Net Investment Income



1 Enter the child’s investment income (see instructions) 1 4,400

2 If the child did not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter

$1,700. Otherwise, see instructions 2 1,700

3 Subtract line 2 from line 1. If zero or less, stop; do not complete the rest of this form but do

attach it to the child’s return 3 2,700

4 Enter the child’s taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR,

line 40. If the child files Form 2555 or 2555-EZ, see the instructions 4 4,100

5 Enter the smaller of line 3 or line 4. If zero, stop; do not complete the rest of this form but do

attach it to the child’s return 5 2,700









1. $850 plus the child’s itemized deductions and on Form 8615, line 1. Line 2 is $1,700 Line 4 (Child’s Taxable Income)

that are directly connected with the pro- because that is more than the sum of $850 and

duction of the investment income entered his directly-connected itemized deductions of Enter on line 4 the child’s taxable income from

on line 1, or $300. Form 1040, line 43; Form 1040A, line 27; or

Form 1040NR, line 40.

2. $1,700.

Example 2. Eleanor, age 8, has investment

Directly connected. Itemized deductions are income of $16,000 and an early withdrawal pen- Child files Form 2555 or 2555-EZ. If the child

directly connected with the production of invest- alty of $100. She has no other income. She has files Form 2555 or 2555-EZ to claim the foreign

ment income if they are for expenses paid to itemized deductions of $1,050 (net of the earned income exclusion or housing exclusion,

produce or collect taxable income or to manage, 2%-of-adjusted-gross-income limit) that are di- the Foreign Earned Income Tax Worksheet in

conserve, or maintain property held for produc- rectly connected with the production of her in- the Form 1040 instructions must be used to

ing income. These expenses include custodian vestment income. Her adjusted gross income, figure the child’s tax. When using Form 8615 to

fees and service charges, service fees to collect entered on line 1, is $15,900 ($16,000 − $100). figure the amount to enter on line 8 of that

taxable interest and dividends, and certain in- The amount on line 2 is $1,900. This is the larger worksheet, enter the amount from line 7 of the

vestment counsel fees. of: worksheet, instead of the child’s taxable income

These expenses are added to certain other

1. $850 plus the $1,050 of directly connected on line 4 of Form 8615.

miscellaneous itemized deductions on Schedule

A (Form 1040). Only the amount greater than itemized deductions, or

2% of the child’s adjusted gross income can be

deducted. See Publication 529, Miscellaneous

2. $1,700. Line 5 (Net Investment Income)

Deductions, for more information. A child’s net investment income cannot be more

than his or her taxable income. Enter on Form

Example 1. Roger, age 12, has investment Line 3 8615, line 5, the smaller of line 3 or line 4. This is

income of $8,000, no other income, no adjust-

Subtract line 2 from line 1 and enter the result on the child’s net investment income.

ments to income, and itemized deductions of

$300 (net of the 2%-of-adjusted-gross-income this line. If zero or less, do not complete the rest If zero or less, do not complete the rest of the

limit) that are directly connected with his invest- of the form. However, you must still attach Form form. However, you must still attach Form 8615

ment income. His adjusted gross income is 8615 to the child’s tax return. Figure the tax on to the child’s tax return. Figure the tax on the

$8,000, which is entered on Form 1040, line 38, the child’s taxable income in the normal manner. child’s taxable income in the normal manner.







Page 12 Publication 929 (2006)

Illustrated Part II of Form 8615

Randy and his sister must each file Form Randy’s sister’s net investment income of Randy’s net investment income on line 5

8615. Their parents’ joint return information $1,520 (from line 5 of her Form 8615) is ($2,280) is added to his sister’s net

is used on the Forms 8615 of both children. entered on line 7 of Randy’s Form 8615. The investment income on line 7 ($1,520) and

The net investment income on line 5 of amounts on line 5 ($2,280), line 6 ($50,570), the total, $3,800, is entered on line 12a.

Randy’s Form 8615 is $2,280. His sister’s and line 7 ($1,520) are added and the total The amount on line 5 ($2,280) is divided

net investment income is $1,520. Randy’s of $54,370 is entered on line 8. by the amount on line 12a ($3,800) and the

parents’ taxable income is $50,570. Their The tax on $54,370 is found in the Tax result, .600, is entered on line 12b.

tax, from the Tax Table, is $6,831. Table using the parents’ joint filing status. The amount on line 11 ($570) is multiplied

Part II of Randy’s Form 8615, with lines 6 The tax, $7,401, is entered on line 9. by the amount on line 12b (.600) and the

through 13 filled in, is shown here. Randy’s parents’ tax of $6,831 (from line 44 result, $342, is entered on line 13. This is

Randy’s parents’ taxable income of of Form 1040) is entered on line 10 and is Randy’s tentative tax based on his parents’

$50,570 (from line 43 of Form 1040) is subtracted from the amount on line 9. The tax rate.

entered on Form 8615, line 6. difference, $570, is entered on line 11.



Part II Tentative Tax Based on the Tax Rate of the Parent

6 Enter the parent’s taxable income from Form 1040, line 43; Form 1040A, line 27; Form 1040EZ,

line 6; Form 1040NR, line 40; or Form 1040NR-EZ, line 14. If zero or less, enter -0-. If the parent 6 50,570

files Form 2555 or 2555-EZ, see the instructions

7 Enter the total, if any, from Forms 8615, line 5, of all other children of the parent named

above. Do not include the amount from line 5 above. 7 1,520

8 Add lines 5, 6, and 7 (see instructions) 8 54,370

9 Enter the tax on the amount on line 8 based on the parent’s filing status above (see instructions).

If the Qualified Dividends and Capital Gain Tax Worksheet, Schedule D Tax Worksheet, or

Schedule J (Form 1040) is used to figure the tax, check here 9 7,401

10 Enter the parent’s tax from Form 1040, line 44; Form 1040A, line 28, minus any alternative

minimum tax; Form 1040EZ, line 11; Form 1040NR, line 41; or Form 1040NR-EZ, line 15. Do not

include any tax from Form 4972 o r 8814. If the Qualified Dividends and Capital Gain Tax

Worksheet, Schedule D Tax Worksheet, or Schedule J (Form 1040) was used to figure the tax,

check here 10 6,831

11 Subtract line 10 from line 9 and enter the result. If line 7 is blank, also enter this amount on line

13 and go to Part III 11 570

12a Add lines 5 and 7 12a 3,800

b Divide line 5 by line 12a. Enter the result as a decimal (rounded to at least three places) 12b . 600

13 Multiply line 11 by line 12b 13 342









Step 2. Figuring a Tentative parents’s tax. Enter the amount from line 7 of the the return using estimates or get an extension of

parent’s Foreign Earned Income Tax Worksheet time to file. Estimates and extensions are dis-

Tax at the Parent’s Tax instead of the parent’s taxable income, on line 6 cussed earlier under Providing Parental Infor-

Rate (Form 8615, Part II) of Form 8615. mation (Form 8615, Lines A – C).

The next step in completing Form 8615 is to

figure a tentative tax on the child’s net invest- Line 7 (Net Investment Income of Line 8 (Parent’s Taxable Income

ment income at the parent’s tax rate. The tenta- Other Children) Plus Children’s Net Investment

tive tax at the parent’s tax rate is the difference

between the tax on the parent’s taxable income

Income)

If the tax return information of the parent is also

figured with the child’s net investment income used on any other child’s Form 8615, enter on Enter on this line the total of lines 5, 6, and 7.

(plus the net investment income of any other line 7 the total of the amounts from line 5 of all You must determine the amount of net capital

child whose Form 8615 includes the tax return the other children’s Forms 8615. Do not include gain and qualified dividends included on this line

information of that parent) and the tax figured the amount from line 5 of the Form 8615 being before completing line 9 of Form 8615.

without it. completed.

When figuring the tentative tax at the par- Net capital gain. Net capital gain is the

ent’s tax rate, do not refigure any of the exclu- Example. Paul and Jane Persimmon have smaller of the gain, if any, on Schedule D, line

sions, deductions, or credits on the parent’s three children, Sharon, Jerry, and Mike, who 15, or the gain, if any, on Schedule D, line 16. If

return because of the child’s net investment in- must attach Form 8615 to their tax returns. The Schedule D is not required, it is the amount on

come. For example, do not refigure the medical children’s net investment income amounts on Form 1040, line 13; Form 1040A, line 10; or

expense deduction. line 5 of their Forms 8615 are: Form 1040NR, line 14.

Figure the tentative tax on lines 6 through 13.

For an example, see the Illustrated Part II of • Sharon — $800 Qualified dividends. Qualified dividends

are those dividends reported on line 9b of Form

Form 8615. • Jerry — $600 1040 or Form 1040A, or line 10b of Form

• Mike — $1,000 1040NR.

Line 6 (Parent’s Taxable Income) Net capital gain and qualified dividends on

Line 7 of Sharon’s Form 8615 will show

$1,600, the total of the amounts on line 5 of line 8. If neither the child nor the parent nor

Enter on line 6 the amount from the parent’s

Jerry’s and Mike’s Forms 8615. any other child has net capital gain, the net

Form 1040, line 43; Form 1040A, line 27; Form

Line 7 of Jerry’s Form 8615 will show $1,800 capital gain on line 8 is zero.

1040EZ, line 6; Form 1040NR, line 40; or Form

1040NR-EZ, line 14. If the parent’s taxable in- ($800 + $1,000). If neither the child, nor the parent, nor any

come is zero or less, enter zero on line 6. Line 7 of Mike’s Form 8615 will show $1,400 other child has qualified dividends, the amount

($800 + $600). of qualified dividends on line 8 is zero.

Parent files Form 2555 or 2555-EZ. If the If the child, parent, or any other child has net

parent files Form 2555 or 2555-EZ, the Foreign Other children’s information not available. capital gain, figure the amount of net capital gain

Earned Income Tax Worksheet in the Form If the net investment income of the other children included on line 8 by adding together the net

1040 instructions must be used to figure the is not available when the return is due, either file capital gain amounts included on lines 5, 6, and



Publication 929 (2006) Page 13

7 of Form 8615. If the child, parent, or any other 6. On line 7, enter the net capital gain in-

Worksheet 2 for Line 11 of the Schedule D

child has qualified dividends, figure the amount cluded on Form 8615, line 8. (See the ear- Tax Worksheet – Unrecaptured

of qualified dividends included on line 8 by ad- lier discussion for line 8.) Section 1250 Gain

ding together the qualified dividend amounts (Line 9 Tax)

7. On lines 8 through 10, follow the work-

included on lines 5, 6, and 7. Use the instruc-

sheet instructions. 1. Enter the amount, if any, from the

tions for Form 8615, line 8, including the appro-

priate Line 5 Worksheet, to find these amounts. 8. On line 11, enter zero if neither the child, child’s Schedule D, line 19. . . . .

parent, nor any other child has unrecap- If line 1 is zero or blank, skip

tured section 1250 gain (line 19 of Sched- lines 2 through 4, enter -0-

Line 9 (Tax on Parent’s Taxable ule D) or 28% rate gain (line 18 of on line 5, and go to line 6.

Income Plus Children’s Net Schedule D). Otherwise, enter the amount 2. Enter the amount, if any, from

Investment Income) of unrecaptured section 1250 gain and the last line of the child’s

28% rate gain included in the net capital completed Line 5 Worksheet in

Figure the tax on the amount on line 8 using the gain on line 8 of Form 8615. Figure these the instructions for Form 8615,

Tax Table, the Tax Computation Worksheet, the amounts as explained later under Figuring line 8 . . . . . . . . . . . . . . . . . . .

Qualified Dividends and Capital Gain Tax Work- unrecaptured section 1250 gain (line 11)

sheet (in the Form 1040, 1040A, or 1040NR 3. Enter the amount from line 2 of

and Figuring 28% rate gain (line 11).

instructions), the Schedule D Tax Worksheet (in the child’s completed Line 5

9. Complete lines 12 through 37, following Worksheet . . . . . . . . . . . . . . .

the Schedule D instructions) or Schedule J

(Form 1040), as follows. the worksheet instructions. Use the par- 4. Divide line 2 by line 3. Enter

ent’s filing status to complete lines 15, 34, the result as a decimal . . . . . . .

• If line 8 does not include any net capital and 36.

gain or qualified dividends, use the Tax 5. Multiply line 1 by line 4 . . . . . . .

Table or Tax Computation Worksheet to Enter the amount from line 37 of this Schedule D

Tax Worksheet on Form 8615, line 9, and check 6. If no other child has unrecaptured

figure this tax. But if Schedule J, Income section 1250 gain, enter -0-.

Averaging for Farmers and Fishermen, is the box on that line.

Otherwise, repeat lines 1 through

used to figure the tax on the parent’s re- Figuring 28% rate gain (line 11). If the 5 for each other child who has

turn, use it to figure this tax. child, parent, or any other child has 28% rate unrecaptured section 1250 gain

gain, figure the amount of 28% rate gain in- and enter the total of the line 5

• If line 8 does include any net capital gain amounts for those children . . . . .

or qualified dividends, use the Qualified cluded in the net capital gain on line 8 of Form

8615 using the following worksheet. 7. Enter the amount, if any, from line

Dividends and Capital Gain Tax Work-

sheet to figure this tax. For details, see the 19 of the parent’s Schedule D . . .

instructions for Form 8615, line 9. How- Worksheet 1 for Line 11 of the Schedule D 8. Add lines 5, 6, and 7. Also include

ever, if the child, parent, or another child Tax Worksheet – 28% Rate Gain this amount on the Schedule D

has 28% rate gain or unrecaptured section (Line 9 Tax) Tax Worksheet, line 11. . . . . . . .

1250 gain, use the Schedule D Tax Work- 1. Enter the amount, if any, from the

sheet. But if Schedule J is used to figure child’s Schedule D, line 18. . . . .

the tax on the parent’s return, use it to Using Schedule J for line 9 tax. Use Sched-

If line 1 is zero or blank, skip

figure this tax. ule J, Income Averaging for Farmers and Fisher-

lines 2 through 4, enter -0- on

men, to figure the line 9 tax on Form 8615 if

line 5, and go to line 6.

Using the Schedule D Tax Worksheet for line Schedule J is used to figure the tax on the

2. Enter the amount from the last parent’s return. First complete the actual Sched-

9 tax. Use the Schedule D Tax Worksheet in

line of the child’s completed ule J for the parent, then use another Schedule J

the Schedule D instructions to figure the line 9 Line 5 Worksheet in the

tax on Form 8615 if the child, parent, or any as a worksheet to figure the tax to enter on line 9

instructions for Form 8615, line 8 of Form 8615. (Do not attach this worksheet to

other child has unrecaptured section 1250 gain

or 28% rate gain. If you must use the Schedule 3. Enter the amount from line 2 the child’s return.)

D Tax Worksheet, first complete any Schedule of the child’s completed Complete this worksheet Schedule J as fol-

D and any actual Schedule D Tax Worksheet Line 5 Worksheet . . . . . . . . . . . lows.

required for the child, parent, or any other child. 4. Divide line 2 by line 3. Enter 1. On line 1, enter the amount from Form

Then figure the line 9 tax using another Sched- the result as a decimal . . . . . . . 8615, line 8.

ule D Tax Worksheet. (Do not attach this Sched-

5. Multiply line 1 by line 4 . . . . . . . 2. On line 2, enter the amount from the par-

ule D Tax Worksheet to the child’s return.)

Complete this Schedule D Tax Worksheet as 6. If no other child has 28% rate ent’s Schedule J, line 2.

follows. gain, enter -0-. Otherwise, repeat

3. Complete line 3 following the Schedule J

lines 1 through 5 above

instructions.

1. On line 1, enter the amount from Form for each other child who has

8615, line 8. 28% rate gain and enter the total 4. Complete line 4. If Form 8615, line 8, in-

of the line 5 amounts for those cludes any net capital gain, use the Quali-

2. On line 2, enter the qualified dividends in- other children . . . . . . . . . . . . . fied Dividends and Capital Gain Tax

cluded on Form 8615, line 8. (See the ear-

7. Enter the amount, if any, from line Worksheet to figure the tax amount on this

lier discussion for line 8.)

18 of the parent’s Schedule D. . . line. For details on how to use the work-

3. On line 3, enter the total of the amounts, if sheet, see the instructions for Form 8615,

any, on line 4g of all Forms 4952 filed by 8. Add lines 5, 6, and 7. Also include line 9, but use the amount on line 3 of this

the child, parent, or any other child. this amount on the Schedule D worksheet Schedule J (instead of the

Tax Worksheet, line 11. . . . . . . amount on Form 8615, line 8) in step (1) of

4. On line 4, enter the total of the amounts, if

Using the Qualified Dividends and Capital

any, on line 4e of all Forms 4952 filed by

Gain Tax Worksheet for line 9 tax. How-

the child, parent, or any other child. If ap-

Figuring unrecaptured section 1250 gain ever, if the child, parent, or any other child

plicable, include instead the smaller

(line 11). If the child, parent, or any other child has 28% rate gain, or unrecaptured sec-

amount entered on the dotted line next to

has unrecaptured section 1250 gain, figure the tion 1250 gain, use the Schedule D Tax

line 4e.

amount of unrecaptured section 1250 gain in- Worksheet. Follow the earlier instructions

5. On lines 5 and 6, follow the worksheet cluded in the net capital gain on line 8 of Form under Using the Schedule D Tax Work-

instructions. 8615 using the following worksheet. sheet for line 9 tax, except use the amount







Page 14 Publication 929 (2006)

on line 3 of this worksheet Schedule J (in- Line 13 (Child’s Share of Tentative Table or Tax Computation Worksheet (or

stead of the amount on Form 8615, line 8) Tax) Schedule J, if applicable) to figure this tax.

in step (1).

If an amount is entered on line 7, multiply line 11 • If line 14 does include any net capital gain

5. On lines 5 through 16, enter the amounts by the decimal on line 12b and enter the result or qualified dividends, use the Qualified

from the parent’s Schedule J, lines 5 Dividends and Capital Gain Tax Work-

on line 13. This is the child’s share of the tenta-

through 16. sheet to figure this tax. For details, see the

tive tax.

instructions for Form 8615, line 15. How-

6. Complete line 17 following the Schedule J

ever, if the child has 28% rate gain or

instructions. Step 3. Figuring the unrecaptured section 1250 gain, use the

7. On lines 18 through 21, enter the amounts Child’s Tax Schedule D Tax Worksheet. (But use

from the parent’s Schedule J, lines 18 Schedule J instead, if it applies.)

through 21. The final step in figuring a child’s tax using Form

8615 is to determine the larger of:

8. Complete line 22 following the Schedule J Using the Schedule D Tax Worksheet for line

instructions. 1. The total of: 15 tax. Use the Schedule D Tax Worksheet in

the Schedule D instructions to figure the line 15

Enter the amount from line 22 of this worksheet a. The child’s share of the tentative tax tax on Form 8615 if the child has unrecaptured

Schedule J on Form 8615, line 9, and check the based on the parent’s tax rate, plus section 1250 gain or 28% rate gain. Do not

box on that line. attach this Schedule D Tax Worksheet to the

b. The tax on the child’s taxable income in

child’s return.

excess of net investment income, fig-

Line 10 (Parent’s Tax) ured at the child’s tax rate, or Complete this Schedule D Tax Worksheet as

follows.

Enter on line 10 the amount from the parent’s 2. The tax on the child’s taxable income, fig-

Form 1040, line 44; Form 1040A, line 28 (minus 1. On line 1, enter the amount from Form

ured at the child’s tax rate.

any alternative minimum tax); Form 1040EZ, 8615, line 14.

line 11; Form 1040NR, line 41; or Form This is the child’s tax. It is figured on Form

2. On line 2, enter the qualified dividends in-

1040NR-EZ, line 15. Do not include the tax, if 8615, lines 14 through 18.

cluded on Form 8615, line 14. (See the

any, from Form 4972 or Form 8814. earlier discussion for line 14.)

If the parent files Form 2555 or 2555-EZ,

enter the amount from line 8 of the parent’s Line 14 (Child’s Taxable Income in 3. Leave lines 3 through 5 blank.

Foreign Earned Income Tax Worksheet (in the Excess of Net Investment Income) 4. Enter the amount from line 2 on line 6.

Form 1040 instructions), instead of the parent’s

If lines 4 and 5 of Form 8615 are the same, the 5. On line 7, enter the net capital gain in-

tax from Form 1040, line 44.

child’s taxable income is not more than the cluded on Form 8615, line 14. (See the

child’s net investment income. Enter zero on earlier discussion for line 14.)

Line 11 (Tentative Tax) lines 14 and 15, and go to line 16. Also skip the

rest of this discussion and the discussion for line 6. Skip line 8.

Subtract line 10 from line 9 and enter the result 15 that follows. 7. Enter the amount from line 7 on line 9.

on this line. This is the tentative tax. If lines 4 and 5 are not the same, subtract line 8. Complete line 10, following the worksheet

If line 7 is blank, skip lines 12a and 12b and 5 from line 4 and enter the result on line 14. instructions.

enter the amount from line 11 on line 13. Also Then, before completing line 15, you must deter-

skip the discussion for lines 12a and 12b that mine the amount of net capital gain and qualified 9. On line 11, enter zero if the child has no

follows. dividends, if any, included on line 14. 28% rate gain (Schedule D, line 18) or

unrecaptured section 1250 gain (Schedule

Net capital gain and qualified dividends on D, line 19). Otherwise, see Worksheet 1

Lines 12a and 12b (Dividing the line 14. If the child does not have any net for Line 11 of the Schedule D Tax Work-

Tentative Tax) capital gain or qualified dividends, the amount of sheet – 28% Rate Gain (Line 9 Tax) and

the net capital gain and qualified dividends in- Worksheet 2 for Line 11 of the Schedule D

If an amount is entered on line 7, divide the Tax Worksheet – Unrecaptured Section

cluded on line 14 is zero.

tentative tax shown on line 11 among the chil- 1250 Gain (Line 9 Tax) under Using the

dren according to each child’s share of the total If the child has net capital gain, the amount of

Schedule D Tax Worksheet for line 9 tax,

net investment income. This is done on lines net capital gain included on line 14 is the amount

earlier. For each worksheet you complete,

12a, 12b, and 13. Add the amount on line 7 to from line 2 of the child’s completed Line 5 Work-

subtract line 5 of that worksheet from line 1

the amount on line 5 and enter the total on line sheet minus the amount from the last line of that

of that worksheet, and include the result on

12a. Divide the amount on line 5 by the amount worksheet. (See the earlier discussion for line 8

line 11 of this worksheet.

on line 12a and enter the result, as a decimal, on of Form 8615.)

line 12b. If the child has qualified dividends, the 10. Complete lines 12 through 37, following

amount of qualified dividends included on line the worksheet instructions. Use the child’s

Example. In the earlier example under Line 14 is the amount from line 1 of the child’s com- filing status to complete lines 15, 34, and

7 (Net Investment Income of Other Children), pleted Line 5 Worksheet minus the amount from 36.

Sharon’s Form 8615 shows $1,600 on line 7. the next to the last line of that worksheet. (See Enter the amount from line 37 of this Schedule D

The amount entered on line 12a is $2,400, the the earlier discussion of line 8 of Form 8615.) Tax Worksheet on Form 8615, line 15, and

total of the amounts on lines 5 and 7 ($800 + check the box on that line.

$1,600). The decimal on line 12b is .333, figured

as follows and rounded to three places. Line 15 (Tax on Child’s Taxable Using Schedule J for line 15 tax. If Schedule

Income in Excess of Net J applies, use it as a worksheet to figure the tax

Investment Income) to enter on Form 8615, line 15. On line 1 of this

$800 worksheet, enter the amount from Form 8615,

= .333 Figure the tax on the amount on line 14 using the line 14. Complete lines 2 through 22 following

$2,400 Tax Table, the Tax Computation Worksheet, the the Schedule J instructions. Use the child’s filing

Qualified Dividends and Capital Gain Tax Work- status to complete lines 4, 8, 12, and 16.

sheet, the Schedule D Tax Worksheet, or

Enter the amount from line 22 of this work-

Schedule J (Form 1040), as follows.

sheet Schedule J, on Form 8615, line 15, and

• If line 14 does not include any net capital check the box on that line. Do not attach this

gain or qualified dividends, use the Tax worksheet to the child’s return.



Publication 929 (2006) Page 15

Line 16 (Combined Tax) three exemptions, including an exemption for Sara’s parents do not have a net capital gain

Sara, on their return. or any qualified dividends, so no net capital gain

Add lines 13 and 15 and enter the total on line or qualified dividends are on line 6 of Sara’s

Because she is under age 18 and has more

16. This is the child’s tax figured at the parent’s Form 8615. Therefore, the amount of net capital

rate on net investment income and the child’s than $1,700 investment income, part of her in-

gain on line 8 of Sara’s Form 8615 is $275, and

rate on other income. come may be subject to tax at her parents’ rate.

the amount of qualified dividends on that line is

A completed Form 8615 must be attached to her

$412. John uses the Qualified Dividends and

return.

Capital Gain Tax Worksheet (in the Form 1040A

Line 17 (Tax at Child’s Rate) Sara’s father, John, fills out Sara’s return. He instructions) and follows the instructions under

completes her Form 1040A through line 27, then Using the Qualified Dividends and Capital Gain

Figure the tax on line 4 (the child’s taxable in- begins completing her Form 8615. Tax Worksheet for line 9 tax in the Form 8615

come). Use the Tax Table, the Tax Computation

John enters his name and social security instructions to figure the tax to enter on Sara’s

Worksheet, the Qualified Dividends and Capital

number on Sara’s Form 8615 because his name Form 8615, line 9.

Gain Tax Worksheet, the Schedule D Tax Work-

and number are listed first on the joint return he John enters $412 on line 2 of the Qualified

sheet, or the child’s actual Schedule J, which-

and Laura are filing. He checks the box for Dividends and Capital Gain Tax Worksheet, and

ever applies. Enter the tax amount on line 17. If it

married filing jointly. $275 on line 3 of that worksheet. That completed

is from the Qualified Dividends and Capital Gain

worksheet is shown later as Filled-in Qualified

Tax Worksheet, the Schedule D Tax Worksheet, He enters Sara’s investment income, Dividends and Capital Gain Tax Worksheet #1.

or Schedule J, check the box on that line. $2,800, on line 1. Sara does not itemize deduc- John enters the tax of $6,543 on Sara’s Form

tions, so John enters $1,700 on line 2. He enters 8615, line 9.

$1,100 ($2,800 − $1,700) on line 3. He enters the tax from his and Laura’s Form

Line 18 (Tax)

Sara’s taxable income, as shown on her 1040 ($6,449) on Sara’s Form 8615, line 10,

Enter on line 18 the larger of line 16 or line 17. Form 1040A, line 27, is $2,500. This is her total then subtracts that amount from the $6,543 on

Also enter this amount on the child’s Form 1040, income ($4,350) minus her standard deduction line 9, and enters the $94 remainder on line 11.

line 44; Form 1040A, line 28; or Form 1040NR, ($1,850). Her standard deduction is limited to Because line 7 is blank, John skips lines 12a

line 41. This is the child’s tax. the amount of her earned income plus $300. and 12b and enters $94 on line 13.

John enters $2,500 on line 4. John subtracts line 5 ($1,100) from line 4

($2,500) and enters the result, $1,400, on line

Child files Form 2555 or 2555-EZ. If the child John compares lines 3 and 4 and enters the 14. Using the instructions for line 14 earlier,

files Form 2555 or 2555-EZ, do not enter the smaller amount, $1,100, on line 5. John subtracts the net capital gain included on

amount from Form 8615, line 18, on the child’s

John enters $48,000 on line 6. This is the line 5 ($275) from Sara’s net capital gain ($700)

Form 1040, line 44. Instead, enter the amount

taxable income from line 43 of John and Laura’s to figure the $425 net capital gain included on

from Form 8615, line 18, on line 8 of the child’s

joint Form 1040 return. Sara is an only child, so line 14. He also subtracts the qualified dividends

Foreign Earned Income Tax Worksheet (in the

line 7 is blank. He adds line 5 ($1,100), line 6 included on line 5 ($412) from Sara’s qualified

Form 1040 instructions). Then complete the rest

($48,000), and line 7 (blank) and enters $49,100 dividends ($1,050) to figure the $638 qualified

of the Foreign Earned Income Tax Worksheet.

on line 8. dividends included on line 14. He uses another

Enter the amount from line 10 of the worksheet

Qualified Dividends and Capital Gain Tax Work-

on the child’s Form 1040, line 44. Because Sara’s capital gain distributions

sheet and follows the instructions under Using

and qualified dividends are included on line 5,

the Qualified Dividends and Capital Gain Tax

Alternative Minimum Tax John uses Line 5 Worksheet #1 (in the instruc-

Worksheet for line 15 tax, in the Form 8615

tions for Form 8615) to figure out that $275 net

instructions, to figure the $87 tax to enter on

A child may be subject to alternative minimum capital gain and $412 qualified dividends are Form 8615, line 15. That completed worksheet

tax (AMT) if he or she has certain items given included on line 5. He completes that worksheet is shown later as Filled-in Qualified Dividends

preferential treatment under the tax law. These as follows. and Capital Gain Tax Worksheet #2.

items include accelerated depreciation and cer-

John adds lines 13 and 15 of Form 8615, and

tain tax-exempt interest income. The AMT may

Line 5 Worksheet #1 enters the sum, $181, on line 16. Then he uses

also apply if the child has passive activity losses

another Qualified Dividends and Capital Gain

or certain distributions from estates or trusts. 1. Enter the child’s qualified

dividends . . . . . . . . . . . . . . . . $1,050 Tax Worksheet to figure the $164 tax on Sara’s

For more information on who is liable for $2,500 taxable income to enter on Form 8615,

AMT and how to figure it, get Form 6251. 2. Enter the child’s net capital gain 700 line 17. That completed worksheet is shown

3. Enter the amount from the child’s later as Filled-in Qualified Dividends and Capital

Limit on exemption amount. Ordinarily, sin- Form 8615, line 1 . . . . . . . . . . . 2,800 Gain Tax Worksheet #3.

gle people can subtract a $42,500 exemption Finally, John compares lines 16 and 17 and

amount from their AMT taxable income. How- 4. Divide line 1 by line 3. Enter the enters the larger amount, $181, on line 18 of

ever, a child who files Form 8615 has a limited result as a decimal (rounded to at Sara’s Form 8615. He also enters that amount

exemption amount. The child’s exemption least 3 places). Do not enter more

on Sara’s Form 1040A, line 28.

amount for 2006 is limited to the child’s earned than 1.000 . . . . . . . . . . . . . . . .375

John also completes Schedule 1, Form

income plus $6,050. Figure the child’s allowable 5. Divide line 2 by line 3. Enter the 1040A (not shown) for Sara.

exemption amount on the worksheet in the in- result as a decimal (rounded to at

structions for Form 6251, line 29. least 3 places). Do not enter more

than 1.000 . . . . . . . . . . . . . . . .250

Illustrated Example 6. Multiply $1,700 by line 4 . . . . . . 638



This example shows how to fill out Forms 8615 7. Multiply $1,700 by line 5 . . . . . . 425

and 1040A for Sara Brown. It also shows how to 8. Qualified dividends on Form

use the Qualified Dividends and Capital Gain 8615, line 5. Subtract line 6 from

Tax Worksheet in the Form 1040A instructions line 1 (but do not enter less than

to figure Sara’s tax. zero or more than the amount on

John and Laura Brown have one child, Sara. Form 8615, line 5) . . . . . . . . . . 412

She is 13 and has $1,050 taxable interest, 9. Net capital gain on Form 8615,

$1,050 qualified dividend income, $700 capital line 5. Subtract line 7 from line 2

gain distributions, and $1,550 earned income. (but do not enter less than zero or

She does not itemize deductions. John and more than the excess of Form

Laura file a joint return with John’s name and 8615, line 5, over line 8 of this

social security number listed first. They claim worksheet) . . . . . . . . . . . . . . . 275



Page 16 Publication 929 (2006)

Form Department of the Treasury—Internal Revenue Service



1040A U.S. Individual Income Tax Return (99) 2006 IRS Use Only—Do not write or staple in this space.

Your first name and initial Last name OMB No. 1545-0074

Label Your social security number

(See page 18.) L

A

B

Sara L Brown 111 00 1111

E If a joint return, spouse’s first name and initial Last name Spouse’s social security number

Use the L

IRS label. H Home address (number and street). If you have a P.O. box, see page 18. Apt. no.

E

You must enter

Otherwise,

please print R

E

1040A MAIN STREET your SSN(s) above.

or type. City, town or post office, state, and ZIP code. If you have a foreign address, see page 18.

Checking a box below will not

Presidential HOMETOWN AZ 85240 change your tax or refund.

Election Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund (see page 18) You Spouse



Filing 1 Single 4 Head of household (with qualifying person). (See page 19.)

2 Married filing jointly (even if only one had income) If the qualifying person is a child but not your dependent,

status enter this child’s name here.

Check only 3 Married filing separately. Enter spouse’s SSN above and

one box. full name here. 5 Qualifying widow(er) with dependent child (see page 20)

6a Yourself. If someone can claim you as a dependent, do not check Boxes

Exemptions checked on

box 6a. 6a and 6b

b Spouse No. of children

c Dependents: (4) if qualifying on 6c who:

(3) Dependent’s

(2) Dependent’s social child for child ● lived with

relationship to you

security number tax credit (see

(1) First name Last name you page 21)

If more than six ● did not live

dependents, with you due

see page 21. to divorce or

separation

(see page 22)



Dependents

on 6c not

entered above



Add numbers

on lines

d Total number of exemptions claimed. above 0

Income

7 Wages, salaries, tips, etc. Attach Form(s) W-2. 7 1,550

Attach

Form(s) W-2

here. Also 8a Taxable interest. Attach Schedule 1 if required. 8a 1,050

attach bTax-exempt interest. Do not include on line 8a. 8b

Form(s) 9a Ordinary dividends. Attach Schedule 1 if required. 9a 1,050

1099-R if tax bQualified dividends (see page 25). 9b 1,050

was withheld.

10 Capital gain distributions (see page 25). 10 700

If you did not 11a IRA 11b Taxable amount

get a W-2, see

page 24.

distributions. 11a (see page 25). 11b

12a Pensions and 12b Taxable amount

Enclose, but do annuities. (see page 26).

not attach, any

12a 12b

payment. 13 Unemployment compensation, Alaska Permanent Fund dividends, and

jury duty pay. 13

14a Social security 14b Taxable amount

benefits. 14a (see page 28). 14b



15 Add lines 7 through 14b (far right column). This is your total income. 15 4,350

Adjusted 16 Penalty on early withdrawal of savings (see

gross page 28). 16

income 17 IRA deduction (see page 28). 17

18 Student loan interest deduction (see page 31). 18

19 Jury duty pay you gave your employer (see

page 31). 19

20 Add lines 16 through 19. These are your total adjustments. 20



21 Subtract line 20 from line 15. This is your adjusted gross income. 21 4,350

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page 58. Cat. No. 11327A Form 1040A (2006)









Publication 929 (2006) Page 17

Form 1040A (2006) Page 2



Tax, 22 Enter the amount from line 21 (adjusted gross income). 22 4,350

credits,

23a Check You were born before January 2, 1942, Blind Total boxes

and if: Spouse was born before January 2, 1942, Blind checked 23a

payments b If you are married filing separately and your spouse itemizes

Standard deductions, see page 32 and check here 23b

Deduction

for— 24 Enter your standard deduction (see left margin). 24 1,850

● People who 25 Subtract line 24 from line 22. If line 24 is more than line 22, enter -0-. 25 2,500

checked any 26 If line 22 is over $112,875, or you provided housing to a person displaced by Hurricane Katrina,

box on line

23a or 23b or see page 32. Otherwise, multiply $3,300 by the total number of exemptions claimed on line 6d. 26

who can be 27 Subtract line 26 from line 25. If line 26 is more than line 25, enter -0-.

claimed as a

dependent, This is your taxable income. 27 2,500

see page 32. 28 Tax, including any alternative minimum tax (see page 32). 28 181

● All others: 29 Credit for child and dependent care expenses.

Single or Attach Schedule 2. 29

Married filing

separately, 30 Credit for the elderly or the disabled. Attach

$5,150 Schedule 3. 30

Married filing 31 Education credits. Attach Form 8863. 31

jointly or

Qualifying 32 Retirement savings contributions credit. Attach Form 8880. 32

widow(er), 33 Child tax credit (see page 37). Attach

$10,300 Form 8901 if required. 33

Head of

household, 34 Add lines 29 through 33. These are your total credits. 34

$7,550 35 Subtract line 34 from line 28. If line 34 is more than line 28, enter -0-. 35 181

36 Advance earned income credit payments from Form(s) W-2, box 9. 36

37 Add lines 35 and 36. This is your total tax. 37 181

38 Federal income tax withheld from Forms W-2 and 1099. 38 155

39 2006 estimated tax payments and amount

If you have applied from 2005 return. 39 100

a qualifying

child, attach 40a Earned income credit (EIC). 40a

Schedule b Nontaxable combat pay election. 40b

EIC. 41 Additional child tax credit. Attach Form 8812. 41

42 Credit for federal telephone excise tax paid.

Attach Form 8913 if required. 42

43 Add lines 38, 39, 40a, 41, and 42. These are your total payments. 43 255

Refund 44 If line 43 is more than line 37, subtract line 37 from line 43.

This is the amount you overpaid. 44 74

Direct 45a Amount of line 44 you want refunded to you. If Form 8888 is attached, check here 45a 74

deposit?

See page 53 b Routing 0 9 0 0 0 0 0 0 0

and fill in number c Type: Checking Savings

45b, 45c,

and 45d or

d Account 1 2 3 4 5 6 7 8 9

number

Form 8888.

46 Amount of line 44 you want applied to your

2007 estimated tax. 46

Amount 47 Amount you owe. Subtract line 43 from line 37. For details on how

you owe to pay, see page 54. 47

48 Estimated tax penalty (see page 54). 48

Do you want to allow another person to discuss this return with the IRS (see page 55)? Yes. Complete the following. No

Third party

Designee’s Phone Personal identification

designee name John Brown no. ( 800) 829-1040 number (PIN) 5 6 7 8 9

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my

Sign knowledge and belief, they are true, correct, and accurately list all amounts and sources of income I received during the tax year. Declaration

here of preparer (other than the taxpayer) is based on all information of which the preparer has any knowledge.

Your signature Date Your occupation Daytime phone number

Joint return?

See page 18.

Keep a copy

Sara L. Brown 2-15-07 Student ( 800 ) 829-1040

Spouse’s signature. If a joint return, both must sign. Date Spouse’s occupation

for your

records.

Date Preparer’s SSN or PTIN

Paid Preparer’s

signature

Check if

self-employed

preparer’s Firm’s name (or EIN

use only yours if self-employed),

address, and ZIP code Phone no. ( )



Form 1040A (2006)









Page 18 Publication 929 (2006)

OMB No. 1545-0074

Form 8615 Tax for Children Under Age 18

With Investment Income of More Than $1,700 2006

Department of the Treasury

Attach only to the child’s Form 1040, Form 1040A, or Form 1040NR. Attachment

Internal Revenue Service (99) See separate instructions. Sequence No. 33

Child’s name shown on return Child’s social security number

Sara L. Brown 111 00 1111

Before you begin: If the child, the parent, or any of the parent’s other children under age 18 must use the Schedule D Tax

Worksheet or has income from farming or fishing, see Pub. 929, Tax Rules for Children and Dependents. It

explains how to figure the child’s tax using the Schedule D Tax Worksheet or Schedule J (Form 1040).

A Parent’s name (first, initial, and last). Caution: See instructions before completing. B Parent’s social security number

John J. Brown 000 00 0001

C Parent’s filing status (check one):

Single Married filing jointly Married filing separately Head of household Qualifying widow(er)

Part I Child’s Net Investment Income



1 Enter the child’s investment income (see instructions) 1 2,800

2 If the child did not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter

$1,700. Otherwise, see instructions 2 1,700

3 Subtract line 2 from line 1. If zero or less, stop; do not complete the rest of this form but do

attach it to the child’s return 3 1,100

4 Enter the child’s taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR,

line 40. If the child files Form 2555 or 2555-EZ, see the instructions 4 2,500

5 Enter the smaller of line 3 or line 4. If zero, stop; do not complete the rest of this form but do

attach it to the child’s return 5 1,100

Part II Tentative Tax Based on the Tax Rate of the Parent

6 Enter the parent’s taxable income from Form 1040, line 43; Form 1040A, line 27; Form 1040EZ,

line 6; Form 1040NR, line 40; or Form 1040NR-EZ, line 14. If zero or less, enter -0-. If the parent

files Form 2555 or 2555-EZ, see the instructions 6 48,000

7 Enter the total, if any, from Forms 8615, line 5, of all other children of the parent named

above. Do not include the amount from line 5 above 7

8 Add lines 5, 6, and 7 (see instructions) 8 49,100

9 Enter the tax on the amount on line 8 based on the parent’s filing status above (see instructions).

If the Qualified Dividends and Capital Gain Tax Worksheet, Schedule D Tax Worksheet, or

Schedule J (Form 1040) is used to figure the tax, check here 9 6,543

10 Enter the parent’s tax from Form 1040, line 44; Form 1040A, line 28, minus any alternative

minimum tax; Form 1040EZ, line 11; Form 1040NR, line 41; or Form 1040NR-EZ, line 15. Do not

include any tax from Form 4972 or 8814. If the parent files Form 2555 or 2555-EZ, see the

instructions. If the Qualified Dividends and Capital Gain Tax Worksheet, Schedule D Tax

Worksheet, or Schedule J (Form 1040) was used to figure the tax, check here 10 6,449

11 Subtract line 10 from line 9 and enter the result. If line 7 is blank, also enter this amount on line

13 and go to Part III 11 94

12a Add lines 5 and 7 12a

b Divide line 5 by line 12a. Enter the result as a decimal (rounded to at least three places) 12b .

13 Multiply line 11 by line 12b 13 94

Part III Child’s Tax—If lines 4 and 5 above are the same, enter -0- on line 15 and go to line 16.



14 Subtract line 5 from line 4 14 1,400



15 Enter the tax on the amount on line 14 based on the child’s filing status (see instructions). If

the Qualified Dividends and Capital Gain Tax Worksheet, Schedule D Tax Worksheet, or

Schedule J (Form 1040) is used to figure the tax, check here 15 87



16 Add lines 13 and 15 16 181

17 Enter the tax on the amount on line 4 based on the child’s filing status (see instructions). If

the Qualified Dividends and Capital Gain Tax Worksheet, Schedule D Tax Worksheet, or

Schedule J (Form 1040) is used to figure the tax, check here 17 164

18 Enter the larger of line 16 or line 17 here and on the child’s Form 1040, line 44; Form 1040A,

line 28; or Form 1040NR, line 41. If the child files Form 2555 or 2555-EZ, see the instructions 18 181

For Paperwork Reduction Act Notice, see the instructions. Cat. No. 64113U Form 8615 (2006)









Publication 929 (2006) Page 19

Filled-in Qualified Dividends and Capital Gain Tax Worksheet #1





Before you begin: Be sure you do not have to file Form 1040 (see the instructions for Form 1040A, line 10)



1. Enter the amount from Form 1040A, line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 49,100*

2. Enter the amount from Form 1040A, line 9b . . . . . . . . . . . . . . . . 2. 412*

3. Enter the amount from Form 1040A, line 10 . . . . . . . . . . . . . . . . 3. 275*

4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 687

5. Subtract line 4 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 48,413

6. Enter the smaller of:

• The amount on line 1, or

• $30,650 if single or married filing separately,

$61,300 if married filing jointly or qualifying widow(er), or

$41,050 if head of household.

7. Is the amount on line 5 equal to or more than the amount on line 6?

} .......... 6. 49,100*







Yes. Skip lines 7 through 9; go to line 10 and check the “No” box.

No. Enter the amount from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . 7. 48,413

8. Subtract line 7 from line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. 687

9. Multiply line 8 by 5% (.05) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 34

10. Are the amount on lines 4 and 8 the same?

Yes. Skip lines 10 through 13; go to line 14.

No. Enter the smaller of line 1 or line 4 . . . . . . . . . . . . . . . . . . . . . 10.

11. Enter the amount from line 8 (if line 8 is blank, enter -0-) . . . . . . . . . . . . . . . . . . . . . . . . 11.

12. Subtract line 11 from line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.

13. Multiply line 12 by 15% (.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.

14. Figure the tax on the amount on line 5. Use the Tax Table. Enter tax here . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. 6,509

15. Add lines 9, 13, and 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. 6,543

16. Figure the tax on the amount on line 1. Use the Tax Table. Enter tax here . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. 6,614

17. Tax on all taxable income. Enter the smaller of line 15 or line 16 here and on Form 1040A, line 28 . . . . . . . . . . 17. 6,543









* See the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 9 tax in the Form 8615 instructions.









Page 20 Publication 929 (2006)

Filled-in Qualified Dividends and Capital Gain Tax Worksheet #2





Before you begin: Be sure you do not have to file Form 1040 (see the instructions for Form 1040A, line 10)



1. Enter the amount from Form 1040A, line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 1,400*

2. Enter the amount from Form 1040A, line 9b . . . . . . . . . . . 2. 638*

3. Enter the amount from Form 1040A, line 10 . . . . . . . . . . . 3. 425*

4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 1,063

5. Subtract line 4 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . 5. 337

6. Enter the smaller of:

• The amount on line 1, or

• $30,650 if single or married filing separately,

$61,300 if married filing jointly or qualifying widow(er), or

$41,050 if head of household.

7. Is the amount on line 5 equal to or more than the amount on line 6?

} ............ 6. 1,400*







Yes. Skip lines 7 through 9; go to line 10 and check the “No” box.

No. Enter the amount from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. 337

8. Subtract line 7 from line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. 1,063

9. Multiply line 8 by 5% (.05) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 53

10. Are the amount on lines 4 and 8 the same?

Yes. Skip lines 10 through 13; go to line 14.

No. Enter the smaller of line 1 or line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.

11. Enter the amount from line 8 (if line 8 is blank, enter -0-) . . . . . . . . . . . . . . . . . . . . . 11.

12. Subtract line 11 from line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.

13. Multiply line 12 by 15% (.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.

14. Figure the tax on the amount on line 5. Use the Tax Table. Enter tax here . . . . . . . . . . . . . . . . . . . . . . . . . . 14. 34*

15. Add lines 9, 13, and 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. 87

16. Figure the tax on the amount on line 1. Use the Tax Table. Enter tax here . . . . . . . . . . . . . . . . . . . . . . . . . . 16. 141*

17. Tax on all taxable income. Enter the smaller of line 15 or line 16 here and on Form 1040A, line 28 . . . . . . . . 17. 87









* See the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 15 tax in the Form 8615 instructions.









Publication 929 (2006) Page 21

Filled-in Qualified Dividends and Capital Gain Tax Worksheet #3





Before you begin: Be sure you do not have to file Form 1040 (see the instructions for Form 1040A, line 10)



1. Enter the amount from Form 1040A, line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 2,500

2. Enter the amount from Form 1040A, line 9b . . . . . . . . . . . 2. 1,050

3. Enter the amount from Form 1040A, line 10 . . . . . . . . . . . 3. 700

4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 1,750

5. Subtract line 4 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . 5. 750

6. Enter the smaller of:

• The amount on line 1, or

• $30,650 if single or married filing separately,

$61,300 if married filing jointly or qualifying widow(er), or

$41,050 if head of household.

7. Is the amount on line 5 equal to or more than the amount on line 6?

} ............ 6. 2,500







Yes. Skip lines 7 through 9; go to line 10 and check the “No” box.

No. Enter the amount from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. 750

8. Subtract line 7 from line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. 1,750

9. Multiply line 8 by 5% (.05) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 88

10. Are the amount on lines 4 and 8 the same?

Yes. Skip lines 10 through 13; go to line 14.

No. Enter the smaller of line 1 or line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.

11. Enter the amount from line 8 (if line 8 is blank, enter -0-) . . . . . . . . . . . . . . . . . . . . . 11.

12. Subtract line 11 from line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.

13. Multiply line 12 by 15% (.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.

14. Figure the tax on the amount on line 5. Use the Tax Table. Enter tax here . . . . . . . . . . . . . . . . . . . . . . . . . . 14. 76

15. Add lines 9, 13, and 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. 164

16. Figure the tax on the amount on line 1. Use the Tax Table. Enter tax here . . . . . . . . . . . . . . . . . . . . . . . . . . 16. 251

17. Tax on all taxable income. Enter the smaller of line 15 or line 16 here and on Form 1040A, line 28 . . . . . . . . 17. 164









Page 22 Publication 929 (2006)

Glossary

The definitions in this glossary For purposes of determining a to the investment income, plus the • Is neither your qualifying child

are the meanings of the terms as dependent’s standard deduction, larger of: nor the qualifying child of any-

used in this publication. The same earned income also includes any 1. $850 plus itemized deductions one else.

term used in another publication part of a scholarship or fellowship

directly connected with pro- For details, see Exemptions for De-

may have a slightly different mean- grant that the dependent must in-

ducing the investment in- pendents in Publication 501.

ing. clude in his or her gross income.

come, or

For purposes of completing

2. $1,700. Standard deduction. An amount

Adjusted gross income. Gross Form 8615, earned income also in-

income (defined later) minus ad- (based on filing status, age, and

cludes a taxable distribution from a

justments to income (defined next). qualified disability trust. Qualified dividends. Dividends blindness) that can be subtracted

eligible for the lower tax rates that from adjusted gross income in fig-

Adjustments to income. De- Exemption. An amount ($3,300 apply to a net capital gain. They are uring taxable income. The standard

ductions that are subtracted from for 2006) that can be subtracted reported to you in box 1b of Form deduction is not used if itemized

gross income in figuring adjusted from income in figuring how much deductions are claimed.

1099-DIV. You report them on

gross income. They include deduc- income will be taxed. Exemptions

Form 1040 or Form 1040A, line 9b,

tions for moving expenses, alimony generally are allowed for the tax- Tax year. The time period cov-

or Form 1040NR, line 10b. For

paid, a penalty on early withdrawal payer, the taxpayer’s spouse, and ered by a tax return. Usually this is

more information, see Publication

of savings, and contributions to an dependents. January 1 to December 31, a cal-

550.

individual retirement arrangement endar year, but taxpayers can elect

(IRA). Adjustments to income can Gross income. All income from

Qualifying child. To be your de- a fiscal tax year with different be-

be taken even if itemized deduc- all sources (other than tax-exempt

pendent (defined earlier), a person ginning and ending dates.

tions (defined later) are not income) that must be included on

your tax return. must be either your qualifying

claimed. Taxable income. Gross income

child or your qualifying relative

Investment income. See minus any adjustments to income,

Alternative minimum tax. A tax (defined next). Generally, a per-

Unearned income, later, and In- any allowable exemptions, and ei-

designed to collect at least a mini- son is your qualifying child if that

vestment income defined, earlier, ther itemized deductions or the

mum amount of tax from taxpayers person:

standard deduction.

who benefit from the tax laws that

under Step 1. Figuring the Child’s • Is your child, stepchild, foster

Net Investment Income (Form child, brother, sister, step-

give special treatment to certain Unearned income. Income other

8615, Part I). brother, stepsister, or a de-

kinds of income and allow deduc- than earned income. This is invest-

tions and credits for certain kinds of Itemized deductions. Deduc- scendant of any of them, ment-type income and includes in-

expenses. tions allowed on Schedule A (Form • Lived with you for more than terest, dividends, and capital gains.

1040) for medical and dental ex- half of the year, Distributions of interest, dividends,

Capital gain distribution. An al-

penses, taxes, interest, charitable • Did not provide more than capital gains, and other unearned

located amount paid to, or treated contributions, casualty and theft half of his or her own support income from a trust are also

as paid to, a shareholder by a mu- losses, and miscellaneous deduc- for the year, and unearned income to a beneficiary

tual fund, regulated investment

company, or real estate investment

tions. They are subtracted from ad- • Was under age 19 at the end of the trust. However, for purposes

justed gross income in figuring of the year (or was under age

trust from its net realized long-term of completing Form 8615, a taxable

taxable income. Itemized deduc- 24 at the end of the year and

capital gains. This amount is in ad- distribution from a qualified disabil-

tions cannot be claimed if the stan- a student, or was any age

dition to any ordinary dividend paid dard deduction is chosen. ity trust is considered earned in-

to the shareholder. You will receive and permanently and totally come.

a statement from the payer if this Net capital gain. The excess of disabled).

applies to you. net long-term capital gain over any Unrecaptured section 1250 gain.

For details, see Exemptions for De-

net short-term capital loss. For Generally, any part of your net cap-

pendents in Publication 501.

Dependent. A person, other than 2006, this is the smaller of the gain ital gain from selling section 1250

the taxpayer or the taxpayer’s on line 15 or the gain on line 16 of Qualifying relative. To be your property (real property) that is due

spouse, for whom an exemption Schedule D (Form 1040). If Sched- dependent (defined earlier), a per- to depreciation. For details, see

(defined later) can be claimed. To ule D is not required, net capital son must be either your qualifying Publication 550.

be your dependent, a person must gain is the amount of capital gain child (defined earlier) or your qual-

be your qualifying child or qualify- distributions on Form 1040, line 13; 28% rate gain. Gain from the

ifying relative. Generally, a person

ing relative (both defined later). For Form 1040A, line 10; or Form sale of collectibles and, generally,

is your qualifying relative if that

more information, see Exemptions 1040NR, line 14. person: the taxable part of your gain from

for Dependents in Publication 501. the sale of qualified small business

Net investment income. The • Lives with or is related to you,

stock held more than 5 years. For

Earned income. Salaries, total of all investment income • Does not have $3,300 or

details, see the instructions for

wages, tips, professional fees, and (other than tax-exempt income) more of gross (total) income,

Schedule D (Form 1040).

other amounts received as pay for reduced by the sum of the follow- • Is supported (generally more ■

work actually done. ing: adjustments to income related than 50%) by you, and









Publication 929 (2006) Page 23

How To Get Tax Help

You can get help with unresolved available free to eligible tax- • TeleTax topics. Call comfortable talking with

tax issues, order free publications payers. 1-800-829-4477 to listen to someone in person, visit your

and forms, ask tax questions, and • Check the status of your 2006 pre-recorded messages cov- local Taxpayer Assistance

get information from the IRS in sev- refund. Click on Where’s My ering various tax topics. Center where you can spread

eral ways. By selecting the method Refund. Wait at least 6 weeks • Refund information. To check out your records and talk with

that is best for you, you will have from the date you filed your the status of your 2006 re- an IRS representative

quick and easy access to tax help. return (3 weeks if you filed fund, call 1-800-829-4477 face-to-face. No appointment

electronically). Have your and press 1 for automated re- is necessary, but if you pre-

Contacting your Taxpayer Advo- fer, you can call your local

2006 tax return available be- fund information or call

cate. The Taxpayer Advocate Center and leave a message

Service is an independent organi- cause you will need to know 1-800-829-1954. Be sure to

your social security number, wait at least 6 weeks from the requesting an appointment to

zation within the IRS whose em- resolve a tax account issue. A

ployees assist taxpayers who are your filing status, and the ex- date you filed your return (3

act whole dollar amount of weeks if you filed electroni- representative will call you

experiencing economic harm, who back within 2 business days

are seeking help in resolving tax your refund. cally). Have your 2006 tax re-

• Download forms, instructions, turn available because you to schedule an in-person ap-

problems that have not been re- pointment at your conve-

solved through normal channels, or and publications. will need to know your social

nience. To find the number,

who believe that an IRS system or • Order IRS products online. security number, your filing

go to

procedure is not working as it • Research your tax questions status, and the exact whole

dollar amount of your refund. www.irs.gov/localcontacts or

should. online. look in the phone book under

You can contact the Taxpayer • Search publications online by United States Government,

Advocate Service by calling topic or keyword. Evaluating the quality of our Internal Revenue Service.

toll-free 1-877-777-4778 or TTY/ • View Internal Revenue Bulle- telephone services. To ensure

TDD 1-800-829-4059 to see if you tins (IRBs) published in the IRS representatives give accurate,

are eligible for assistance. You can Mail. You can send your

last few years. courteous, and professional an- order for forms, instruc-

also call or write to your local tax- • Figure your withholding al- swers, we use several methods to tions, and publications to

payer advocate, whose phone evaluate the quality of our tele-

lowances using our withhold- the address below. You should re-

number and address are listed in phone services. One method is for

ing calculator. ceive a response within 10 busi-

your local telephone directory and

in Publication 1546, The Taxpayer

• Sign up to receive local and a second IRS representative to lis- ness days after your request is

national tax news by email. ten in on or record random tele- received.

Advocate Service of the IRS - How phone calls. Another is to ask some

to Get Help With Unresolved Tax • Get information on starting

callers to complete a short survey

Problems. You can file Form 911, and operating a small busi- National Distribution Center

at the end of the call.

Application for Taxpayer Assis- ness. P.O. Box 8903

tance Order, or ask an IRS em- Bloomington, IL 61702-8903

Walk-in. Many products

ployee to complete it on your Phone. Many services

and services are avail- CD for tax products.

behalf. For more information, go to are available by phone.

able on a walk-in basis. You can order Publica-

www.irs.gov/advocate.

tion 1796, IRS Tax Prod-

• Ordering forms, instructions,

Low income tax clinics

and publications. Call

• Products. You can walk in to ucts CD, and obtain:

(LITCs). LITCs are independent

1-800-829-3676 to order cur-

many post offices, libraries, • A CD that is released twice

organizations that provide low in- and IRS offices to pick up so you have the latest prod-

come taxpayers with representa- rent-year forms, instructions,

certain forms, instructions, ucts. The first release ships in

tion in federal tax controversies and publications, and

and publications. Some IRS late December and the final

with the IRS for free or for a nomi- prior-year forms and instruc-

offices, libraries, grocery release ships in late Febru-

nal charge. The clinics also provide tions. You should receive

stores, copy centers, city and ary.

tax education and outreach for tax- your order within 10 days.

• Asking tax questions. Call the

county government offices, • Current-year forms, instruc-

payers with limited English profi- credit unions, and office sup- tions, and publications.

ciency or who speak English as a IRS with your tax questions at

1-800-829-1040.

ply stores have a collection of • Prior-year forms, instructions,

second language. Publication products available to print and publications.

4134, Low Income Taxpayer Clinic • Solving problems. You can from a CD-ROM or photocopy

List, provides information on clinics get face-to-face help solving • Bonus: Historical Tax Prod-

from reproducible proofs.

in your area. It is available at tax problems every business ucts DVD - Ships with the fi-

Also, some IRS offices and li-

www.irs.gov or at your local IRS day in IRS Taxpayer Assis- nal release.

braries have the Internal Rev-

office. tance Centers. An employee enue Code, regulations,

• Tax Map: an electronic re-

can explain IRS letters, re- search tool and finding aid.

Internal Revenue Bulletins,

Free tax services. To find out quest adjustments to your ac- and Cumulative Bulletins • Tax law frequently asked

what services are available, get count, or help you set up a questions.

available for research pur-

Publication 910, IRS Guide to Free payment plan. Call your local poses. • Tax Topics from the IRS tele-

Tax Services. It contains a list of

free tax publications and describes

Taxpayer Assistance Center • Services. You can walk in to phone response system.

for an appointment. To find your local Taxpayer Assis- • Fill-in, print, and save fea-

other free tax information services, the number, go to tures for most tax forms.

including tax education and assis- tance Center every business

tance programs and a list of

www.irs.gov/localcontacts or day for personal, face-to-face • Internal Revenue Bulletins.

TeleTax topics.

look in the phone book under tax help. An employee can • Toll-free and email technical

United States Government, explain IRS letters, request support.

Internet. You can access Internal Revenue Service. adjustments to your tax ac-

the IRS website at • TTY/TDD equipment. If you count, or help you set up a Buy the CD from National Tech-

www.irs.gov 24 hours a have access to TTY/TDD payment plan. If you need to nical Information Service (NTIS) at

day, 7 days a week to: equipment, call resolve a tax problem, have www.irs.gov/cdorders for $35 (no

• E-file your return. Find out 1-800-829-4059 to ask tax questions about how the tax handling fee) or call

about commercial tax prepa- questions or to order forms law applies to your individual 1 - 8 7 7 - C D F O R M S

ration and e-file services and publications. tax return, or you’re more (1-877-233-6767) toll free to buy



Page 24 Publication 929 (2006)

the CD for $35 (plus a $5 handling plan, find financing for your • “Rate the Product” survey — An updated version of this CD is

fee). Price is subject to change. business, and much more. your opportunity to suggest available each year in early April.

• All the business tax forms, in- changes for future editions. You can get a free copy by calling

CD for small busi- structions, and publications • A site map of the CD to help 1-800-829-3676 or by visiting

nesses. Publication needed to successfully man- you navigate the pages of the www.irs.gov/smallbiz.

3207, The Small Busi- age a business. CD with ease.

ness Resource Guide CD for • Tax law changes for 2006. • An interactive “Teens in Biz”

2006, is a must for every small • Tax Map: an electronic re- module that gives practical

business owner or any taxpayer search tool and finding aid. tips for teens about starting

about to start a business. This • Web links to various govern- their own business, creating a

year’s CD includes: ment agencies, business as- business plan, and filing

• Helpful information, such as sociations, and IRS taxes.

■

how to prepare a business organizations.









Publication 929 (2006) Page 25

To help us develop a more useful index, please let us know if you have ideas for index entries.

Index See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.





Investment income . . . . . . . 6-10 H R

28% rate gain . . . . . . . . . . . . . . 8, 14 Making the election and its Help (See Tax help) Recapture taxes . . . . . . . . . . . . . . 4

Defined . . . . . . . . . . . . . . . . . . . . 23 effect . . . . . . . . . . . . . . . . . . . . . 7 Relative, qualifying . . . . . . . . . . 23

Estimated tax: Remarried custodial parent:

Penalty for underpayment . . . . 8 I

A Reporting child’s investment

Exemption: Individual taxpayer

income . . . . . . . . . . . . . . . . . . . 6

Adjusted gross income (AGI): identification numbers

Defined . . . . . . . . . . . . . . . . . . . . 23 Remarried widowed parent:

Defined . . . . . . . . . . . . . . . . . . . . 23 (ITINs) . . . . . . . . . . . . . . . . . . . . . . 2

Own exemption — Reporting child’s investment

Adjustments to income . . . . . . 11 Investment income:

dependent . . . . . . . . . . . . . . . . 5 income . . . . . . . . . . . . . . . . . . . 6

Defined . . . . . . . . . . . . . . . . . . . . 23 Defined . . . . . . . . . . . . . . . . 11, 23

Exemption from Reporting child’s investment

Age 65 or older Election to include on parent’s

withholding . . . . . . . . . . . . . . . . 6 income:

dependents . . . . . . . . . . . . . . . . 3 return (See Election to

Extension of time to file . . . . . 11 include child’s income on Joint return not filed by

Filing requirement worksheet

for . . . . . . . . . . . . . . . . . . . . . . . . 3 parent’s return) parents . . . . . . . . . . . . . . . . . . . 6

Figuring child’s tax . . . . . . 15-16 Joint returns . . . . . . . . . . . . . . . . 6

Aliens: F

Individual taxpayer identification IRS notice sent to child . . . . . . . 4 Married filing separately . . . . . 6

Figures (See Tables and figures) Parents divorced . . . . . . . . . . . . 6

number (ITIN) . . . . . . . . . . . . . 2 Itemized deductions:

Figuring child’s income . . . . . . 8 Parents never married . . . . . . . 6

Alternative minimum tax Defined . . . . . . . . . . . . . . . . . . . . 23

Filing requirements . . . . . . 1, 3-4 Directly connected . . . . . . . . . . 12 Remarried custodial

(AMT) . . . . . . . . . . . . . . 1, 4, 7, 16

Defined . . . . . . . . . . . . . . . . . . . . 23 2006, for dependents (Table parent . . . . . . . . . . . . . . . . . . . . 6

1) . . . . . . . . . . . . . . . . . . . . . . . . 3 Which parent’s’ return . . . . . . . 6

Assistance (See Tax help)

Age 65 or older J Returns:

dependents . . . . . . . . . . . . . . . 3 Joint returns: Filing even if not required . . . . 4

B Blind dependents . . . . . . . . . . . . 3 Parents’ return used to report Parent’s election to include

Blind dependents: Filing even if not required . . . . 4 child’s investment child’s income (See Election

Filing requirement worksheet Most dependents . . . . . . . . . . . . 3 income . . . . . . . . . . . . . . . . . . . 6 to include child’s income on

for . . . . . . . . . . . . . . . . . . . . . . . . 3 Filing requirements-other: parent’s return)

Advance earned income credit Responsibility for child’s

L

payments . . . . . . . . . . . . . . . . . 4 return . . . . . . . . . . . . . . . . . . 4-5

C Limit on exemption

Self-employed persons . . . . . . 4 Signing child’s return . . . . . . . . 4

Capital gain distributions . . . . . 8 amount . . . . . . . . . . . . . . . . . . . 16

Spouse itemizes . . . . . . . . . . . . 4

Defined . . . . . . . . . . . . . . . . . . . . 23

Wages from church or qualified

Capital losses . . . . . . . . . . . . . . . 11 S

church-controlled M

Child’s earnings . . . . . . . . . . . . . . 4 organizations . . . . . . . . . . . . . 4 Schedule D Tax

Married taxpayers filing

Child’s expenses . . . . . . . . . . . . . 5 Foreign earned income separately: Worksheet . . . . . . . . . . . . . . . . 14

Child’s investment income: exclusion . . . . . . . . . . . . . . . . . . 1 Reporting child’s investment Section 1202 gain . . . . . . . . . . . . 8

Tax on . . . . . . . . . . . . . . . . . . . 6-22 Form 1040: income . . . . . . . . . . . . . . . . . . . 6 Separated parents:

What’s new . . . . . . . . . . . . . . . . . 1 Missing children, photographs Reporting child’s investment

Schedule A . . . . . . . . . . . . . . . . 12

Child’s return: Schedule D . . . . . . . . . . . . 14, 15 of . . . . . . . . . . . . . . . . . . . . . . . . . . 2 income . . . . . . . . . . . . . . . . . . . 6

Responsibility for . . . . . . . . . . 4-5 More information (See Tax help) Signing child’s return . . . . . . . . 4

Schedule J . . . . . . . . . . . . . 14, 15

Child, qualifying . . . . . . . . . . . . . 23 Social security numbers (SSNs)

Form 1040A:

Comments on publication . . . . 2 Filled in example . . . . . . . . . . . 17 of dependents . . . . . . . . . . . . . . 2

Credits: N Standard deduction . . . . . . . . 1, 5

Form 1099-DIV . . . . . . . . . . . . . . . 8 Net capital gain . . . . . . . . . . . . . 13

Reduced . . . . . . . . . . . . . . . . . . . . 7 Defined . . . . . . . . . . . . . . . . . . . . 23

Form 2555 . . . . . . . . . . . . . . . . . . . 12 Defined . . . . . . . . . . . . . . . . . . . . 23

Form 2555-EZ . . . . . . . . . . . . . . . 12 Worksheet for dependents

Net investment income . . . . . . 12 (Table 2) . . . . . . . . . . . . . . . . . 5

D Form 2848 . . . . . . . . . . . . . . . . . 4, 11 Defined . . . . . . . . . . . . . . . . . . . . 23 Zero . . . . . . . . . . . . . . . . . . . . . . . . 5

Deductible investment Form 4952 . . . . . . . . . . . . . . . . . . . 14

interest . . . . . . . . . . . . . . . . . . . . 7 Suggestions for

Form 6251 . . . . . . . . . . . . . . . . . 7, 16 publication . . . . . . . . . . . . . . . . . 2

Deductions . . . . . . . . . . . . . . . . . . . 7 Form 8615 . . . . . . . . . . . . . . . . 10-16

P

Reduced . . . . . . . . . . . . . . . . . . . . 7 Parents:

Alternate worksheet for . . . . . 11

Dependents: Divorced . . . . . . . . . . . . . . . . . . . . 6

Determining whether Form 8615

Election (See Election to include

T

Defined . . . . . . . . . . . . . . . . . . . . 23 is required (Figure 2) . . . . . 11 Tables and figures:

Exemption for . . . . . . . . . . . . . . . 5 child’s income on parent’s

Figuring child’s tax . . . . . . 15-16 Determining whether Form 8615

Own exemption . . . . . . . . . . . . . 5 return)

Figuring parent’s tentative Never married . . . . . . . . . . . . . . . 6 is required (Figure 2) . . . . . 11

Social security numbers (SSNs) tax . . . . . . . . . . . . . . . . . . . 13-15 Not living together . . . . . . . . . . . 6 Election to include child’s

of . . . . . . . . . . . . . . . . . . . . . . . . 2 Filled in example . . . . . . . . . . . 19 Remarried . . . . . . . . . . . . . . . . . . 6 income on parent’s return

Divorced parents: Illustrated Part I of . . . . . . . . . . 11 (Figure 1) . . . . . . . . . . . . . . . . . 8

Reporting child’s investment Separated . . . . . . . . . . . . . . . . . . 6

Illustrated Part II of . . . . . . . . . 13 Penalties: Filing requirements for

income . . . . . . . . . . . . . . . . . . . 6 dependents (Table 1) . . . . . . 3

Form 8814 . . . . . . . . . . . . . . 7, 8, 10 Estimated tax

Form W-4: underpayment . . . . . . . . . . . . 8 Standard deduction worksheet

E Exemption from Publications (See Tax help) for dependents (Table

Earned income . . . . . . . . . . . . . . . 3 withholding . . . . . . . . . . . . . . . 6 2) . . . . . . . . . . . . . . . . . . . . . . . . 5

Defined . . . . . . . . . . . . . . . . . . . . 23 Free tax services . . . . . . . . . . . . 24 Tax help . . . . . . . . . . . . . . . . . 11, 24

Election to include child’s Q Tax on child’s investment

income on parent’s return: Qualified dividends . . . . . . . . 8, 13 income . . . . . . . . . . . . . . . . . . 6-23

Child’s unearned income . . . . . 3 G Defined . . . . . . . . . . . . . . . . . . . . 23 More than $1,700 . . . . . . . 10-22

Choosing to make election Gross income: Qualifying child . . . . . . . . . . . . . 23 Tax year:

(Figure 1) . . . . . . . . . . . . . . . . . 8 Defined . . . . . . . . . . . . . . . . . . . . 23 Qualifying relative . . . . . . . . . . . 23 Defined . . . . . . . . . . . . . . . . . . . . 23



Page 26 Publication 929 (2006)

Taxable income: Unrecaptured section 1250 Earned and unearned income of Standard deduction worksheet

Defined . . . . . . . . . . . . . . . . . . . . 23 gain . . . . . . . . . . . . . . . . . . . . . 8, 14 dependent . . . . . . . . . . . . . . . . 3 for dependents (Table

Taxpayer Advocate . . . . . . . . . . 24 Defined . . . . . . . . . . . . . . . . . . . . 23 Form 8615 alternate 2) . . . . . . . . . . . . . . . . . . . . . . . . 5

Third party designee . . . . . . . . . 4 Worksheet . . . . . . . . . . . . . . . . . 14 worksheet . . . . . . . . . . . . . . . 11 Unrecaptured section 1250

Trust income . . . . . . . . . . . . . . . . 11 Qualified dividends and capital gain . . . . . . . . . . . . . . . . . . . . . 14

gain tax . . . . . . . . . . . . . . . . . . 14

TTY/TDD information . . . . . . . . 24 W

Filled in example . . . . . 20, 21, ■

Withholding . . . . . . . . . . . . . . . . . . 5

22

U Worksheets: Schedule D Tax . . . . . . . . . . . . 14

Unearned income . . . . . . . . . . . . 3 Dependent’s filing

Defined . . . . . . . . . . . . . . . . . . . . 23 requirement . . . . . . . . . . . . . . . 3









Publication 929 (2006) Page 27