Dealing with taxes can sometimes feel like navigating a labyrinth, especially when an unexpected form like Form 8615, "Tax for Certain Children Who Have Unearned Income" (often called the "Kiddie Tax"), pops up in your TurboTax return. It can be a real head-scratcher! But don't worry, you're not alone, and we're here to guide you through understanding what it is, why it appears, and most importantly, how to potentially get rid of it or correctly manage it in TurboTax.
Let's dive in!
Understanding the "Kiddie Tax" and Form 8615
Before we tackle getting rid of Form 8615, it's crucial to understand why it exists. The "Kiddie Tax" was implemented to prevent high-income parents from shifting investment income to their children, who would typically be in a lower tax bracket. Essentially, if a child has a significant amount of unearned income (like interest, dividends, or capital gains), a portion of that income might be taxed at the parent's marginal tax rate instead of the child's lower rate.
When does Form 8615 apply?
Generally, Form 8615 is required if a child meets all of the following conditions for the tax year:
The child had more than a certain amount of unearned income (for 2024, this threshold is $2,600).
The child is required to file a tax return.
The child was:
Under age 18 at the end of the tax year, OR
Age 18 at the end of the tax year and didn't have earned income that was more than half of their support, OR
A full-time student at least age 19 and under age 24 at the end of the tax year and didn't have earned income that was more than half of their support.
At least one of the child's parents was alive at the end of the tax year.
The child doesn't file a joint return for the tax year.
If your child's situation fits these criteria, TurboTax will likely generate Form 8615. The goal isn't always to eliminate the form, but rather to ensure it's generated only when truly necessary or to utilize alternative reporting methods if available.
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| How To Get Rid Of Form 8615 In Turbotax |
Step 1: Don't Panic! Let's Assess the Situation Together.
So, you've fired up TurboTax, and there it is: Form 8615. Before you start frantically clicking buttons or deleting forms, take a deep breath. This form appearing means TurboTax has identified your child's unearned income as potentially subject to the "Kiddie Tax." Our first step is to verify if it's truly required or if there's a simpler alternative.
Sub-heading: Why Is Form 8615 Appearing?
TurboTax automatically generates Form 8615 when it detects your child's unearned income exceeds the annual threshold and they meet the age and dependency criteria for the "Kiddie Tax." This is a feature designed to help you comply with IRS rules, not to create extra work for you. It's often triggered by income reported on forms like:
Form 1099-INT (Interest Income)
Form 1099-DIV (Dividends and Distributions)
Form 1099-B (Proceeds From Broker and Barter Exchange Transactions - for capital gains)
Step 2: Check the "Kiddie Tax" Eligibility & Income Thresholds
The most common reason Form 8615 appears unexpectedly is a misunderstanding of the "Kiddie Tax" thresholds or the nature of your child's income. Let's meticulously review if your child genuinely meets all the criteria.
Tip: Revisit challenging parts.
Sub-heading: Verify Your Child's Age and Student Status
Under 18: If your child was under 18 at the end of the tax year and has significant unearned income, Form 8615 is almost certainly required.
Age 18: If they were 18, did their earned income (from a job, for example) account for more than half of their total support? If so, they might be exempt from the "Kiddie Tax."
Full-Time Student (19-23): For full-time students aged 19-23, the same "earned income more than half of support" rule applies. If their earned income did constitute more than half of their support, Form 8615 may not be needed.
Sub-heading: Scrutinize Unearned Income Sources and Amounts
The Threshold: For the 2024 tax year, the "Kiddie Tax" applies to unearned income above $2,600.
The first $1,300 of unearned income is covered by the child's standard deduction.
The next $1,300 is taxed at the child's tax rate.
Any unearned income above $2,600 is generally subject to the parent's tax rate.
What Counts as Unearned Income? This includes:
Taxable interest
Ordinary dividends
Capital gains (including capital gain distributions)
Rents and royalties
Taxable scholarship and fellowship grants (not reported on Form W-2)
Unemployment compensation
Alimony
Taxable part of Social Security and pension payments
Are there any entries in TurboTax that might be incorrectly categorized as unearned income for your child? Sometimes, a small error in data entry can trigger the form. Go back and check every income source entered for your child.
Step 3: Consider the Form 8814 "Parent's Election" Option
This is often the easiest way to "get rid of" Form 8615 for many families, as it allows you to report your child's unearned income directly on your tax return. This means the child doesn't have to file their own return (and thus, no Form 8615 for them!).
Sub-heading: Eligibility for Form 8814
You can elect to include your child's income on your return if all of the following conditions are met:
The child was under age 19 (or under age 24 if a full-time student) at the end of the tax year.
The child's only income was from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends).
The child's gross income was less than $13,000 (for 2024).
No estimated tax payments were made for the child for the tax year.
No federal income tax was withheld from the child's income under backup withholding rules.
You are the parent of the child.
Sub-heading: How to Make the Election in TurboTax
TurboTax is designed to walk you through this. If your child qualifies, TurboTax will typically prompt you with the option to include their income on your return.
Navigate to the Child's Income Section: In TurboTax, go to the section where you entered your child's income. This is usually under "Federal Taxes" -> "Wages & Income" -> "Less Common Income" -> "Child's Income (under age 24)".
Review the Interview Questions: TurboTax will ask you a series of questions about your child's income and their eligibility. Be very careful and accurate with your answers.
Look for the Form 8814 Prompt: If your child's income meets the criteria for Form 8814, TurboTax should present you with the option to make the "Parent's Election to Report Child's Interest and Dividends." Select this option.
Complete Form 8814: TurboTax will then guide you through filling out Form 8814, which will automatically transfer the relevant unearned income to your return.
If you successfully make this election, Form 8615 should disappear from your child's potential forms (if you were preparing a separate return for them).
QuickTip: Repetition reinforces learning.
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Step 4: Manually Delete Form 8615 in TurboTax (Use with Caution!)
If, after reviewing all the conditions, you are certain that Form 8615 is not required for your child, and the Form 8814 election isn't applicable or hasn't resolved it, you can manually delete the form in TurboTax. However, exercise extreme caution here. Deleting a required form can lead to an incorrect return and potential issues with the IRS. Only proceed if you are absolutely confident it's not needed.
Sub-heading: Steps to Delete Form 8615 in TurboTax Online
The exact steps might vary slightly depending on your TurboTax version, but generally:
Sign in to your TurboTax account.
Select "Tax Tools" from the left-hand menu.
Click on "Tools."
In the pop-up window labeled "Tool Center," select "Delete a form."
You'll see a "Review Form List." Scroll down and locate "Form 8615" in the list.
Click "Delete" next to Form 8615.
TurboTax may prompt you that other related worksheets or forms will also be deleted. Approve and click "Delete."
Once deleted, scroll to the bottom of the "Review Form List" and click "Continue with My Return."
Sub-heading: What if Form 8615 Regenerates?
If you delete Form 8615 and it immediately reappears, it means there's an underlying data entry that is still triggering its generation. You haven't addressed the root cause. In this scenario:
Go back through the income section for your child.
Carefully review every entry for unearned income (interest, dividends, capital gains, etc.).
Ensure that the amounts entered do not exceed the kiddie tax thresholds if your goal is to avoid the form based on income limits.
Also, double-check the dependent information for your child. A common mistake is selecting an incorrect age or student status that forces the Kiddie Tax rules to apply when they shouldn't.
You might need to use the "Topic Search" feature (usually found under "Tax Tools" -> "Tools") and search for "kiddie tax" or "Form 8615" to jump directly to the interview questions that are generating the form. Review those questions and adjust your answers if necessary.
Step 5: Strategies to Avoid the Kiddie Tax in Future Years
Prevention is always better than a cure! If you find yourself frequently dealing with Form 8615, consider these strategies to manage your child's unearned income:
Sub-heading: Invest in Tax-Advantaged Accounts
529 College Savings Plans: Contributions to 529 plans grow tax-deferred, and qualified withdrawals for education expenses are tax-free. This is an excellent way to save for college without triggering the Kiddie Tax on growth.
Custodial Roth IRAs: If your child has earned income, they can contribute to a Roth IRA. Contributions grow tax-free, and qualified withdrawals in retirement are also tax-free. This avoids the Kiddie Tax entirely as the income is earned income, and the growth isn't taxed until withdrawal (and then, often tax-free).
Sub-heading: Prioritize Growth Investments over Income Investments
Instead of investing in high-dividend stocks or interest-bearing accounts that generate annual unearned income, consider investments that focus on capital appreciation (like growth stocks or certain mutual funds) where gains are only realized when the investment is sold. If these are held until the child is no longer subject to the Kiddie Tax, the gains will be taxed at their potentially lower adult rate.
Series EE and I Bonds: Interest on these bonds can be deferred until redemption, which can be after the child is past the age of "Kiddie Tax" applicability.
Tip: Remember, the small details add value.
Sub-heading: Monitor Unearned Income Annually
Keep a close eye on your child's unearned income throughout the year. If it approaches the Kiddie Tax threshold, you might consider adjusting their investments or distributing the income differently.
FAQs: How to...
Here are 10 common "How to" questions related to Form 8615 and the Kiddie Tax, with quick answers:
How to determine if my child is subject to the Kiddie Tax?
Your child is subject if they have over $2,600 (for 2024) in unearned income, are required to file, meet specific age/student criteria (under 18, 18 without sufficient earned income, or full-time student 19-23 without sufficient earned income), have at least one living parent, and don't file a joint return.
How to find Form 8615 in TurboTax?
Form 8615 is usually generated automatically if your child's unearned income meets the criteria. You can typically find it by going to "Tax Tools" -> "Tools" -> "Delete a form" or by searching for "Form 8615" in the program's search bar.
How to avoid the Kiddie Tax entirely?
Keep your child's total unearned income below the annual threshold ($2,600 for 2024) or utilize tax-advantaged accounts like 529 plans or custodial Roth IRAs (if they have earned income).
How to report my child's income on my own tax return?
You can use Form 8814, "Parent's Election To Report Child's Interest and Dividends," if your child's only income is from interest and dividends and their gross income is below $13,000 (for 2024). TurboTax will typically prompt you for this option if eligible.
Tip: Read the whole thing before forming an opinion.
How to correctly enter my child's unearned income in TurboTax?
Navigate to the "Federal Taxes" -> "Wages & Income" section, then usually under "Less Common Income," look for "Child's Income (under age 24)" or similar. Follow the prompts carefully, entering all relevant income from 1099-INT, 1099-DIV, etc.
How to check if my child's earned income is enough to avoid the Kiddie Tax?
For children aged 18, or full-time students aged 19-23, their earned income must be more than half of the total amount they contributed to their own support during the year to potentially avoid the Kiddie Tax.
How to correct an error that's causing Form 8615 to appear incorrectly?
Go back to the input sections for your child's dependent information and income. Carefully review the age, student status, and amounts/types of income entered. Small data entry errors can often trigger the form.
How to handle capital gains for a child with the Kiddie Tax?
Capital gains are considered unearned income and are subject to the Kiddie Tax rules if they exceed the threshold. They will be taxed at the parent's marginal capital gains rate.
How to delete Form 8615 if I'm sure it's not needed?
In TurboTax Online, go to "Tax Tools" -> "Tools" -> "Delete a form," then select Form 8615 and confirm deletion. Be extremely cautious and ensure it's genuinely not required before deleting.
How to get further help from TurboTax support regarding Form 8615?
If you're still unsure or the form keeps regenerating, use the "Help" or "Support" links within TurboTax. They have a robust knowledge base and customer service options that can provide personalized assistance.
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