Jo Willetts, EA
Director, Tax Resources
Published on: February 26, 2021
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What is IRS Form 8615? Learn about Form 8615 and calculating children’s unearned income here.
Form 8615 is used to calculate taxes on certain children's unearned income.
Unearned income typically refers to investment income such as interest, dividends, capital gains, and rental income. However, for this particular tax, a larger definition is utilized for unearned income and more sources of income in the child's name are considered. These sources may include unemployment compensation, IRA and other retirement plan distributions, scholarship and grant payments, royalty income, and taxable portions of Social Security benefits.
If a child is under 18 and received more than $2,200 of non-wage income, Form 8615 may be required. This situation is most common with parents who have set up savings and investment accounts for their children and have them named as co-owners, but can also arise from the child being named in a will, recipient of scholarship funds, and being named as a beneficiary on an account while still a minor.
Form 8615 must be filed with the child’s tax return if any of the following apply:
If these conditions are met, Form 8615 needs to be filed regardless of whether the child is another taxpayer's dependent or not. The only time Form 8615 will not be required is if both of the child's parents are deceased by the end of the tax year.
If the only unearned income the child is reporting is comprised of interest, dividends, and/or Alaska permanent fund dividends of less than $11,000, the parents can make an election to file Form 8814 and claim this income as their own.
While the child will not need to file a tax return, and subsequently will not need to file Form 8615, it may result in higher taxes for the parent(s) and potentially negate certain tax benefits such as the Earned Income Tax Credit, or trigger the net investment income tax, since these figures are based on total investment income.
About the Author
Jo Willetts, Director of Tax Resources at Jackson Hewitt, has more than 25 years of experience in the tax industry. As an Enrolled Agent, Jo has attained the highest level of certification for a tax professional. She began her career at Jackson Hewitt as a Tax Pro, working her way up to General Manager of a franchise store. In her current role, Jo provides expert knowledge company-wide to ensure that tax information distributed through all Jackson Hewitt channels is current and accurate.