U.S. Individual Income Tax Return

2007 Instructions for Form 8615
Tax for Children Under Age 18 With Investment Income of More Than
$1,700

Purpose:

This is the first circulated draft of the 2007 Instructions for Form
8615 for your review and comments. The major changes are
shown below.

TPCC Meeting:

None, but may be arranged if requested.

Form:

The 2007 Form 8615 was previously circulated. The most recent
circulated draft is dated April 25, 2007. You can view that
circulation by clicking on the following link:
http://taxforms.web.irs.gov/Products/Drafts/20072/07f8615_d1.pdf

Revisions:

The 2006 Instructions for Form 8615 can be viewed by clicking on
the following link:
http://www.irs.gov/pub/irs-pdf/i8615.pdf

Other Products:

Circulations of draft tax forms, instructions, notices, and
publications are posted at:
http://taxforms.web.irs.gov/draft_products.html

Comments:

Please email, fax, call, or mail any comments by July 31, 2007.

Robert G. Black
Tax Law Specialist
Tax Forms and Publications
SE:W:CAR:MP:T:I:P

Email: [email protected]
Phone: (202) 283-6634
Fax:
(202) 283-0001

Explanation of Major Changes to the 2007 Instructions for Form 8615
•
•
•
•

We updated years as appropriate.
We removed the “What’s New” section that was in the 2006 instructions as those
issues are no longer new.
We updated the exemption amount and exemption phase out amount per RP
2006-53, sec. 3.18.
We revised line 2 of the Child’s Investment Income Worksheet on page 2 by
deleting mention of Form 1040A, line 16. In 2006, line 16 of Form 1040A was for
the penalty on early withdrawal of savings, but in 2007, it will be for educator
expenses.

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2007

Department of the Treasury
Internal Revenue Service

Instructions for Form 8615
Tax for Children Under Age 18 With Investment Income of More Than $1,700

General Instructions Incomplete Information
Purpose of Form
For children under age 18, investment
income over $1,700 is taxed at the
parent’s rate if the parent’s rate is
higher than the child’s. If the child’s
investment income is more than
$1,700, use Form 8615 to figure the
child’s tax.

Investment Income
For Form 8615, “investment income”
includes all taxable income other than
earned income as defined on this page.
Investment income includes taxable
interest, ordinary dividends, capital
gains (including capital gain
distributions), rents, royalties, etc. It
also includes taxable social security
benefits, pension and annuity income,
and income (other than earned income)
received as the beneficiary of a trust.

Who Must File
Form 8615 must be filed for any child
who meets the following conditions.
• The child was under age 18 at the
end of 2007. A child born on January 1,
1990, is considered to be age 18 at the
end of 2007.
• At least one of the child’s parents
was alive at the end of 2007.
• The child had more than $1,700 of
investment income.
• The child is required to file a tax
return.
• The child does not file a joint return
for 2007.
The parent may be able to elect

TIP to report the child’s interest,
ordinary dividends, and capital
gain distributions on the parent’s return.
If the parent makes this election, the
child will not have to file a return or
Form 8615. However, the federal
income tax on the child’s income,
including qualified dividends and capital
gain distributions, may be higher if this
election is made. For more details, see
Form 8814, Parents’ Election To Report
Child’s Interest and Dividends.

Additional Information
For more details, see Pub. 929, Tax
Rules for Children and Dependents.

for Parent or Other
Children
If the parent’s taxable income or filing
status or the net investment income of
the parent’s other children is not known
by the due date of the child’s return,
reasonable estimates can be used.
Enter “Estimated” next to the
appropriate line(s) of Form 8615. When
the correct information is available, file
Form 1040X, Amended U.S. Individual
Income Tax Return.
Instead of using estimates, the child
may be able to get an automatic
6-month extension of time to file. For
details, see Form 4868, Application for
Automatic Extension of Time To File
U.S. Individual Income Tax Return.

Amended Return
If after the child’s return is filed, the
parent’s taxable income changes or the
net investment income of any of the
parent’s other children changes, the
child’s tax must be refigured using the
adjusted amounts. If the child’s tax
changes, file Form 1040X to correct the
child’s tax.

Alternative Minimum Tax
A child whose tax is figured on Form
8615 may owe the alternative minimum
tax. For details, see Form 6251,
Alternative Minimum Tax — Individuals,
and its instructions.

Line Instructions
Lines A and B
If the child’s parents were married to
each other and filed a joint return, enter
the name and social security number
(SSN) of the parent who is listed first on
the joint return.
If the parents were married but filed
separate returns, enter the name and
SSN of the parent who had the higher
taxable income. If you do not know
which parent had the higher taxable
income, see Pub. 929.
If the parents were unmarried,
treated as unmarried for federal income
tax purposes, or separated by either a
divorce or separate maintenance
Cat. No. 28914R

decree, enter the name and SSN of the
parent with whom the child lived for
most of the year (the custodial parent).
Exceptions. If the custodial parent
remarried and filed a joint return with
his or her new spouse, enter the name
and SSN of the person listed first on
the joint return, even if that person is
not the child’s parent. If the custodial
parent and his or her new spouse filed
separate returns, enter the name and
SSN of the person with the higher
taxable income, even if that person is
not the child’s parent.
If the parents were unmarried but
lived together during the year with the
child, enter the name and SSN of the
parent who had the higher taxable
income.

Line 1
If the child had no earned income
(defined below), enter the child’s
adjusted gross income from Form 1040,
line 38; Form 1040A, line 22; or Form
1040NR, line 36.
If the child had earned income, use
the worksheet on page 2 to figure the
amount to enter on line 1. But use Pub.
929 instead of the worksheet to figure
the amount to enter on line 1 if the
child:
• Files Form 2555 or 2555-EZ (relating
to foreign earned income),
• Has a net loss from self-employment,
or
• Claims a net operating loss
deduction.
Earned income. Earned income
includes wages, tips, and other
payments received for personal
services performed. Generally, it is the
total of the amounts reported on Form
1040, lines 7, 12, and 18; Form 1040A,
line 7; or Form 1040NR, lines 8, 13,
and 19.
Earned income also includes any
taxable distribution from a qualified
disability trust. A qualified disability trust
is any trust:
1. Described in 42 U.S.C.
1396p(c)(2)(B)(iv) and established
solely for the benefit of an individual
under 65 years of age who is disabled,
and
2. All the beneficiaries of which are
determined by the Commissioner of
Social Security to have been disabled

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for some part of the tax year within the
meaning of 42 U.S.C. 1382c(a)(3).
A trust will not fail to meet (2) above
just because the trust’s corpus may
revert to a person who is not disabled
after the trust ceases to have any
disabled beneficiaries.
Child’s Investment Income
Worksheet — Line 1
Keep for Your Records

1. Enter the amount from the
child’s Form 1040, line 22;
Form 1040A, line 15; or Form
1040NR, line 23, whichever
applies . . . . . . . . . . . . . . . . .
2. Enter the child’s earned
income (defined above) plus
the amount of any penalty on
early withdrawal of savings
from the child’s Form 1040, line
30, or Form 1040NR, line 29,
whichever applies . . . . . . . . .
3. Subtract line 2 from line 1.
Enter the result here and on
Form 8615, line 1 . . . . . . . . . .

Line 2
If the child itemized deductions, enter
the larger of:
• $1,700, or
• $850 plus the portion of the amount
on Schedule A (Form 1040), line 29 (or
Form 1040NR, Schedule A, line 17),
that is directly connected with the
production of the investment income on
Form 8615, line 1.

Line 4
If the child files Form 2555 or 2555-EZ
to claim the foreign earned income
exclusion or housing exclusion, enter
the amount from line 7 of the child’s
Foreign Earned Income Tax Worksheet
(in the Form 1040 instructions), instead
of the child’s taxable income.

Line 6
If the parent filed a joint return, enter
the taxable income shown on that
return even if the parent’s spouse is not
the child’s parent.
If the parent files Form 2555 or
2555-EZ, enter the amount from line 7
of the parent’s Foreign Earned Income
Tax Worksheet (in the Form 1040
instructions), instead of the parent’s
taxable income.

Line 8
Enter on this line the total of lines 5, 6,
and 7. You must determine the amount
of net capital gain and qualified
dividends included on this line before
completing line 9.
Net capital gain. Net capital gain is
the smaller of the gain, if any, on

Schedule D, line 15, or the gain, if any,
on Schedule D, line 16. If Schedule D is
not required, it is the amount on line 13
of Form 1040, line 10 of Form 1040A,
or line 14 of Form 1040NR.
Qualified dividends. Qualified
dividends are those dividends reported
on line 9b of Form 1040 or Form 1040A
or line 10b of Form 1040NR.
Net capital gain and qualified
dividends on line 8. If neither the
child, nor the parent, nor any other child
has net capital gain, the net capital gain
on line 8 is zero.
If neither the child, nor the parent,
nor any other child has qualified
dividends, the amount of qualified
dividends on line 8 is zero.
If the child, parent, or any other child
has net capital gain, figure the amount
of net capital gain included on line 8 by
adding together the net capital gain
amounts included on lines 5, 6, and 7.
If the child, parent, or any other child
has qualified dividends, figure the
amount of qualified dividends included
on line 8 by adding together the
qualified dividend amounts included on
lines 5, 6, and 7. Use the following
discussions to find these amounts.
Net capital gain or qualified
dividends on line 5. If the child has a
net capital gain or qualified dividends,
use the appropriate Line 5 Worksheet
on this page or page 3 to find the
amount of each included on line 5.
These worksheets are needed to adjust
the child’s net capital gain and qualified
dividends by the appropriate allocated
amount of the child’s deductions.
Line 5 Worksheet #1
Keep for Your Records

7. Multiply $1,700 by line 5 . . . .
8. Qualified dividends on Form
8615, line 5. Subtract line 6
from line 1 (but do not enter
less than zero or more than
the amount on Form 8615,
line 5) . . . . . . . . . . . . . . . . .
9. Net capital gain on Form
8615, line 5. Subtract line 7
from line 2 (but do not enter
less than zero or more than
the excess of Form 8615, line
5, over line 8 of this
worksheet) . . . . . . . . . . . . . .

Line 5 Worksheet #2
Keep for Your Records

Use this worksheet only if line 2 of the
child’s Form 8615 is more than $1,700 and
lines 3 and 5 are the same amount.
1. Enter the child’s qualified
dividends . . . . . . . . . . . . . . .
2. Enter the child’s net capital
gain . . . . . . . . . . . . . . . . . .
3. Add lines 1 and 2 . . . . . . . . .
4. Divide line 1 by line 3. Enter
the result as a decimal
(rounded to at least three
places) . . . . . . . . . . . . . . . .
5. Enter the child’s itemized
deductions directly connected
with the production of the
child’s qualified dividends or
net capital gain . . . . . . . . . . .
6. Multiply line 4 by line 5 . . . . .
7. Subtract line 6 from line 5 . . .
8. Subtract line 7 from line 2 . . .
9. Subtract line 6 from line 1 . . .

Use this worksheet only if line 2 of the
child’s Form 8615 is $1,700 and lines 3 and
5 are the same amount.
1. Enter the child’s qualified
dividends . . . . . . . . . . . . . . .
2. Enter the child’s net capital
gain . . . . . . . . . . . . . . . . . .
3. Enter the amount from the
child’s Form 8615, line 1 . . . .
4. Divide line 1 by line 3. Enter
the result as a decimal
(rounded to at least three
places). Do not enter more
than 1.000 . . . . . . . . . . . . . .
5. Divide line 2 by line 3. Enter
the result as a decimal
(rounded to at least three
places). Do not enter more
than 1.000 . . . . . . . . . . . . . .
6. Multiply $1,700 by line 4 . . . .

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10. Enter the amount from the
child’s Form 8615, line 1 . . . .
11. Divide line 1 by line 10. Enter
the result as a decimal
(rounded to at least three
places). Do not enter more
than 1.000 . . . . . . . . . . . . . .
12. Divide line 2 by line 10. Enter
the result as a decimal
(rounded to at least three
places). Do not enter more
than 1.000 minus the amount
on line 11 . . . . . . . . . . . . . .
13. Multiply $850 by line 11 . . . . .
14. Multiply $850 by line 12 . . . . .
15. Qualified dividends on Form
8615, line 5. Subtract line 13
from line 9 (but do not enter
less than zero or more than
the amount on Form 8615,
line 5) . . . . . . . . . . . . . . . . .

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16. Net capital gain on Form
8615, line 5. Subtract line 14
from line 8 (but do not enter
less than zero or more than
the excess of Form 8615, line
5, over line 15 of this
worksheet) . . . . . . . . . . . . . .

19. Net capital gain on Form
8615, line 5. Subtract line 17
from line 8 (but do not enter
less than zero or more than the
excess of Form 8615, line 5,
over line 18 of this worksheet)
* If you enter more than $117,300 on line 13, see
the Deduction for Exemptions Worksheet in the
Form 1040, Form 1040A, or Form 1040NR
instructions for the amount to enter on line 10.

Line 5 Worksheet #3
Keep for Your Records

Use this worksheet only if the child’s Form
8615, line 5, is less than line 3.
1. Enter the child’s qualified
dividends . . . . . . . . . . . . . . .
2. Enter the child’s net capital gain
3. Add lines 1 and 2 . . . . . . . . .
4. Divide line 1 by line 3. Enter the
result as a decimal (rounded to
at least three places) . . . . . . .
5. If the child itemized deductions,
enter the child’s itemized
deductions directly connected
with the production of the
income on line 3 . . . . . . . . . .
6. Multiply line 4 by line 5 . . . . .
7. Subtract line 6 from line 5 . . .
8. Subtract line 7 from line 2 . . .
9. Subtract line 6 from line 1 . . .
10. If the child can claim his or her
own exemption, enter $3,400*.
Otherwise, enter -0- . . . . . . .
11. If the child itemized deductions,
enter the child’s itemized
deductions not directly
connected with the production
of the income on line 3.
Otherwise, enter the child’s
standard deduction . . . . . . . .
12. Add lines 10 and 11 . . . . . . .
13. Enter the child’s adjusted gross
income (Form 1040, line 38;
Form 1040A, line 22; or Form
1040NR, line 36) . . . . . . . . .
14. Divide line 3 by line 13. Enter
the result as a decimal
(rounded to at least three
places). Do not enter more than
1.000 . . . . . . . . . . . . . . . . .
15. Multiply line 12 by line 14 . . . .
16. Multiply line 15 by line 4 . . . .
17. Subtract line 16 from line 15 . .
18. Qualified dividends on Form
8615, line 5. Subtract line 16
from line 9. Enter the result
here (but do not enter less than
zero or more than the amount
on Form 8615, line 5) . . . . . .

Net capital gain or qualified
dividends on line 6. If the parent has
a net capital gain, its full amount is the
net capital gain included on line 6. If the
parent has qualified dividends, the full
amount is the amount of qualified
dividends included on line 6.
Net capital gain or qualified
dividends on line 7. The net capital
gain included on line 7 is the total of the
amounts of net capital gain included on
line 5 of the other children’s Forms
8615. The qualified dividends included
on line 7 is the total of the amounts of
qualified dividends included on line 5 of
the other children’s Forms 8615. Find
these amounts for each other child as
explained under Net capital gain or
qualified dividends on line 5 on page 2.
(Do not attach the other children’s
Forms 8615 to the child’s return.)

Line 9
Figure the tax using the Tax Table, Tax
Computation Worksheet, Qualified
Dividends and Capital Gain Tax
Worksheet, Schedule D Tax
Worksheet, or Schedule J, whichever
applies. If line 8 includes any net capital
gain or qualified dividends, use the
Qualified Dividends and Capital Gain
Tax Worksheet in the Form 1040,
1040A, or 1040NR instructions to figure
the tax, unless you have to use the
Schedule D Tax Worksheet or
Schedule J (see below).
Schedule J. If any farming or fishing
income is included on line 8, the tax
may be less if you use Schedule J. If
Schedule J was used to figure the tax
on the parent’s return, see Pub. 929 for
details on how to figure the tax.
Schedule D Tax Worksheet. If the
child, parent, or another child has to file
Schedule D and line 18 or 19 of any
Schedule D is more than zero, use the
Schedule D Tax Worksheet in the
Instructions for Schedule D to figure the
tax. See Pub. 929 for details on how to
figure the line 9 tax using the Schedule
D Tax Worksheet.
Using the Qualified Dividends and
Capital Gain Tax Worksheet for line 9
tax. If you use the Qualified Dividends
and Capital Gain Tax Worksheet to
figure the line 9 tax, complete that
worksheet as follows.

-3-

1. On line 1, enter the amount from
Form 8615, line 8.
2. On line 2, enter the amount of
qualified dividends included on Form
8615, line 8. (See the instructions for
line 8.)
3. On line 3, enter the amount of the
net capital gain included on Form 8615,
line 8. (See the instructions for line 8.)
4. Complete line 4 following the
worksheet instructions.
5. If you are completing the
worksheet in the Form 1040
instructions, enter on line 5 the total of
the amounts, if any, on line 4g of all
Forms 4952 filed by the child, parent, or
any other child.
6. Complete lines 6 through 19
(lines 5 through 17 of the worksheet in
the Form 1040A or Form 1040NR
instructions) following the worksheet
instructions. Use the parent’s filing
status to complete lines 8, 16, and 18
(lines 6, 14, and 16 of the worksheet in
the Form 1040A or Form 1040NR
instructions).
Enter the amount from line 19 of the
Qualified Dividends and Capital Gain
Tax Worksheet (or line 17 of the
worksheet in the Form 1040A or Form
1040NR instructions) on Form 8615,
line 9, and check the box on that line.
Do not attach this worksheet to the
child’s return.

Line 10
If the parent filed a joint return, enter
the tax shown on that return even if the
parent’s spouse is not the child’s
parent.
If the parent files Form 2555 or
2555-EZ, enter the amount from line 8
of the parent’s Foreign Earned Income
Tax Worksheet (in the Form 1040
instructions), instead of the parent’s tax
from Form 1040, line 44.

Line 15
Figure the tax using the Tax Table, Tax
Computation Worksheet, Qualified
Dividends and Capital Gain Tax
Worksheet, Schedule D Tax
Worksheet, or Schedule J, whichever
applies. If line 14 includes any net
capital gain or qualified dividends (see
below), use the Qualified Dividends and
Capital Gain Tax Worksheet to figure
this tax. However, if the child has to file
Schedule D and line 18 or line 19 of the
child’s Schedule D is more than zero,
use the Schedule D Tax Worksheet to
figure this tax instead. See Pub. 929 for
details on how to figure the line 15 tax
using the Schedule D Tax Worksheet.
Before using the Qualified Dividends
and Capital Gain Tax Worksheet to
figure the line 15 tax, you will need to
know the amount of net capital gain

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and qualified dividends, if any, included
on line 14.
Net capital gain and qualified
dividends on line 14. If the child does
not have any net capital gain or
qualified dividends, line 14 does not
include any net capital gain or qualified
dividends.
If the child has net capital gain, the
amount of net capital gain included on
line 14 is the amount from line 2 of the
child’s completed Line 5 Worksheet
minus the amount from the last line of
that worksheet.
If the child has qualified dividends,
the amount of qualified dividends
included on line 14 is the amount from
line 1 of the child’s completed Line 5
Worksheet minus the amount from the
next to the last line of that worksheet.
Using the Qualified Dividends and
Capital Gain Tax Worksheet for line
15 tax. If you use the Qualified
Dividends and Capital Gain Tax
Worksheet to figure the line 15 tax,
complete that worksheet as follows.
1. On line 1, enter the amount from
Form 8615, line 14.
2. On line 2, enter the amount of the
qualified dividends included on Form
8615, line 14. (See Net capital gain and
qualified dividends on line 14 on this
page.)
3. On line 3, enter the amount of the
net capital gain included on Form 8615,
line 14. (See Net capital gain and
qualified dividends on line 14 on this
page.)
4. Complete line 4 following the
worksheet instructions.
5. If you are completing the
worksheet in the Form 1040
instructions, leave line 5 blank.

6. Complete lines 6 through 19
(lines 5 through 17 of the worksheet in
the Form 1040A or Form 1040NR
instructions) following the worksheet
instructions. Use the child’s filing status
to complete lines 8, 16, and 18 of the
worksheet for Form 1040 (lines 6, 14,
and 16 of the worksheet for Form
1040A or Form 1040NR).
Enter the amount from line 19 of this
Qualified Dividends and Capital Gain
Tax Worksheet (line 17 of the
worksheet in the Form 1040A or Form
1040NR instructions) on line 15 of Form
8615 and check the box on that line. Do
not attach this worksheet to the child’s
return.
Using Schedule J for line 15 tax. If
line 14 includes any farming or fishing
income, the tax may be less if you use
Schedule J. See Pub. 929 for details on
how to figure the line 15 tax using
Schedule J.

Line 17
Figure the tax using the Tax Table, Tax
Computation Worksheet, Qualified
Dividends and Capital Gain Tax
Worksheet, Schedule D Tax
Worksheet, or Schedule J, whichever
applies. If line 4 includes any qualified
dividends or net capital gain, use the
Qualified Dividends and Capital Gain
Tax Worksheet to figure the tax unless
the Schedule D Tax Worksheet has to
be used instead. If any farming or
fishing income is included on line 4, the
tax may be less if you use Schedule J.

Line 18
If the child files Form 2555 or 2555-EZ,
do not enter the amount from Form

-4-

8615, line 18, on the child’s Form 1040,
line 44. Instead, enter the amount from
Form 8615, line 18, on line 8 of the
child’s Foreign Earned Income Tax
Worksheet (in the Form 1040
instructions). Then complete the rest of
the Foreign Earned Income Tax
Worksheet to figure the child’s tax.
Paperwork Reduction Act Notice.
We ask for the information on this form
to carry out the Internal Revenue laws
of the United States. You are required
to give us the information. We need it to
ensure that you are complying with
these laws and to allow us to figure and
collect the right amount of tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records
relating to a form or its instructions
must be retained as long as their
contents may become material in the
administration of any Internal Revenue
law. Generally, tax returns and return
information are confidential, as required
by Internal Revenue Code section
6103.
The average time and expenses
required to complete and file this form
will vary depending on individual
circumstances. For the estimated
averages, see the instructions for your
income tax return.
If you have suggestions for making
this form simpler, we would be happy to
hear from you. See the instructions for
your income tax return.