Step 3. Figuring
the Child's Tax
(Form 8615, Part III)
The final step in figuring a child's tax using Form 8615 is to determine the larger
of:
- The total of:
- The child's share of the tentative tax based on the parent's tax rate, plus
- The tax on the child's taxable income in excess of net investment income, figured at the
child's tax rate, or
- The tax on the child's taxable income, figured at the child's tax rate.
This is the child's tax. It is figured on lines 14 through 18 of Form 8615.
Alternative minimum tax. A child may be subject to alternative
minimum tax (AMT) if he or she has certain items given preferential treatment under the
tax law. See Alternative Minimum Tax in chapter 31.
For more information on who is liable for AMT and how to figure it, get Form 6251. For
information on special limits that apply to a child who files Form 6251, Alternative
Minimum Tax - Individuals, see Alternative Minimum Tax in Publication 929.
Illustrated Example
The following example includes a completed Form 8615. Form 1040A is not shown.
John and Laura Brown have one child, Sara. She is 13 and has $2,750 taxable interest
and dividend income and $1,500 earned income. She does not itemize deductions. John and
Laura file a joint return with John's name and social security number listed first. They
claim three exemptions, including an exemption for Sara, on their return.
Because Sara is under age 14 and has more than $1,500 investment income, part of her
income may be subject to tax at her parents' rate. A completed Form 8615 must be attached
to her return.
Sara's father, John, fills out Sara's return for her.
John enters his name and social security number on Sara's Form 8615 because his name
and number are listed first on the joint return he and Laura are filing. He checks the box
for married filing jointly.
He enters Sara's investment income, $2,750, on line 1. Sara does not itemize
deductions, so John enters $1,500 on line 2. He enters $1,250 ($2,750 - $1,500) on line 3.
Sara's taxable income, as shown on line 27 of her Form 1040A, is $2,500. This is her
total income ($4,250) minus her standard deduction ($1,750). Her standard deduction is
limited to the amount of her earned income plus $250. John enters $2,500 on line 4.
John compares lines 3 and 4 and enters the smaller amount, $1,250, on line 5.
John enters $48,000 on line 6. This is the taxable income from line 41 of their joint
Form 1040 return. Sara is an only child, so line 7 is blank. He adds line 5 ($1,250), line
6 ($48,000), and line 7 (blank), and enters $49,250 on line 8.
Using the column for married filing jointly in the Tax Table, John finds the tax on
$49,250. He enters the tax, $7,100 on line 9. He enters $6,763 on line 10. This is the tax
from line 42 of John and Laura's Form 1040. He enters $337 on line 11 ($7,100 - $6,763).
Because line 7 is blank, John skips lines 12a and 12b and enters $337 on line 13.
John subtracts line 5 ($1,250) from line 4 ($2,500) and enters the result, $1,250, on
line 14. Using the column for single filing status in the Tax Table, John finds the tax on
$1,250 and enters this tax, $126, on line 15. He adds lines 13 ($337) and 15 ($126) and
enters $463 on line 16.
Using the column for single filing status in the Tax Table, John finds the tax on
$2,500 ( line 4) and enters this tax, $251, on line 17.
John compares lines 16 and 17 and enters the larger amount, $463, on line 18 of Sara's
Form 8615. He also enters that amount on line 28 of Sara's Form 1040A.
John also completes Schedule 1 (Form 1040A) for Sara.
FormForms: 8615
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