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File past year taxes Publication 929 - Main Content Table of Contents Part 1. File past year taxes Rules for All Dependents Filing RequirementsEarned Income Only Unearned Income Only Both Earned and Unearned Income Other Filing Requirements Should a Return Be Filed Even If Not Required? Responsibility for Child's ReturnThird party designee. File past year taxes Designated as representative. File past year taxes IRS notice. File past year taxes Standard DeductionStandard Deduction of Zero Dependent's Own Exemption Withholding From WagesExceptions. File past year taxes Part 2. File past year taxes Tax on Unearned Income of Certain ChildrenWhich Parent's Return To Use Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, Lines A–C) Step 1. File past year taxes Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. File past year taxes Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. File past year taxes Figuring the Child's Tax (Form 8615, Part III) Alternative Minimum Tax Illustrated Example Part 1. File past year taxes Rules for All Dependents This part of the publication discusses the filing requirements for dependents, who is responsible for a child's return, how to figure a dependent's standard deduction and exemption (if any), and whether a dependent can claim exemption from federal income tax withholding. File past year taxes Filing Requirements Whether a dependent has to file a return generally depends on the amount of the dependent's earned and unearned income and whether the dependent is married, is age 65 or older, or is blind. File past year taxes A dependent may have to file a return even if his or her income is less than the amount that would normally require a return. File past year taxes See Other Filing Requirements, later. File past year taxes The following sections apply to dependents with: Earned income only, Unearned income only, and Both earned and unearned income. File past year taxes  To find out whether a dependent must file, read the section that applies, or use Table 1. File past year taxes Earned Income Only A dependent whose gross income is only earned income must file a return if the gross income is more than the amount listed in the following table. File past year taxes Marital Status Amount Single   Under 65 and not blind $6,100 Either 65 or older or blind $7,600 65 or older and blind $9,100 Married*   Under 65 and not blind $6,100 Either 65 or older or blind $7,300 65 or older and blind $8,500 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). File past year taxes Example. File past year taxes William is 16. File past year taxes His mother claims an exemption for him on her income tax return. File past year taxes He worked part time on weekends during the school year and full time during the summer. File past year taxes He earned $7,000 in wages. File past year taxes He did not have any unearned income. File past year taxes He must file a tax return because he has earned income only and his gross income is more than $6,100. File past year taxes If he is blind, he does not have to file a return because his gross income is not more than $7,600. File past year taxes Unearned Income Only A dependent whose gross income is only unearned income must file a return if the gross income is more than the amount listed in the following table. File past year taxes Marital Status Amount Single   Under 65 and not blind $1,000 Either 65 or older or blind $2,500 65 or older and blind $4,000 Married*   Under 65 and not blind $1,000 Either 65 or older or blind $2,200 65 or older and blind $3,400 *If a dependent's spouse itemizes deductions on a separate return, the dependent must file a return if the dependent has $5 or more of gross income (earned and/or unearned). File past year taxes Example. File past year taxes Sarah is 18 and single. File past year taxes Her parents can claim an exemption for her on their income tax return. File past year taxes She received $1,970 of taxable interest and dividend income. File past year taxes She did not work during the year. File past year taxes She must file a tax return because she has unearned income only and her gross income is more than $1,000. File past year taxes If she is blind, she does not have to file a return because she has unearned income only and her gross income is not more than $2,500. File past year taxes Election to report child's unearned income on parent's return. File past year taxes   A parent of a child under age 19 (or under age 24 if a full-time student) may be able to elect to include the child's interest and dividend income on the parent's return. File past year taxes See Parent's Election To Report Child's Interest and Dividends in Part 2. File past year taxes If the parent makes this election, the child does not have to file a return. File past year taxes Both Earned and Unearned Income A dependent who has both earned and unearned income generally must file a return if the dependent's gross income is more than line 5 of the following worksheet. File past year taxes Filing Requirement Worksheet for Most Dependents 1. File past year taxes Enter dependent's earned income plus $350     2. File past year taxes Minimum amount   $1,000 3. File past year taxes Compare lines 1 and 2. File past year taxes Enter the larger amount     4. File past year taxes Maximum amount   6,100 5. File past year taxes Compare lines 3 and 4. File past year taxes Enter the smaller amount     6. File past year taxes Enter the dependent's gross income. File past year taxes If line 6 is more than line 5, the dependent must file an income tax return. File past year taxes If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. File past year taxes       Table 1. File past year taxes 2013 Filing Requirements for Dependents If your parent (or someone else) can claim you as a dependent, use this table to see if you must file a return. File past year taxes   See the definitions of “dependent,”“earned income,”“unearned income,” and “gross income” in the Glossary. File past year taxes   Single dependents—Were you either age 65 or older or blind?     No. File past year taxes You must file a return if any of the following apply. File past year taxes       Your unearned income was over $1,000. File past year taxes Your earned income was over $6,100. File past year taxes Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. File past year taxes         Yes. File past year taxes You must file a return if any of the following apply. File past year taxes     Your unearned income was over $2,500 ($4,000 if 65 or older and blind), Your earned income was over $7,600 ($9,100 if 65 or older and blind), Your gross income was more than the larger of—       $2,500 ($4,000 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,850 ($3,350 if 65 or older and blind). File past year taxes       Married dependents—Were you either age 65 or older or blind?     No. File past year taxes You must file a return if any of the following apply. File past year taxes       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. File past year taxes Your unearned income was over $1,000. File past year taxes Your earned income was over $6,100. File past year taxes Your gross income was more than the larger of—       $1,000, or Your earned income (up to $5,750) plus $350. File past year taxes       Yes. File past year taxes You must file a return if any of the following apply. File past year taxes       Your gross income was at least $5 and your spouse files a separate return and itemizes deductions. File past year taxes Your unearned income was over $2,200 ($3,400 if 65 or older and blind), Your earned income was over $7,300 ($8,500 if 65 or older and blind), Your gross income was more than the larger of—       $2,200 ($3,400 if 65 or older and blind), or Your earned income (up to $5,750) plus $1,550 ($2,750 if 65 or older and blind). File past year taxes       Example 1. File past year taxes Joe is 20, single, not blind, and a full-time college student. File past year taxes He does not provide more than half of his own support, and his parents claim an exemption for him on their income tax return. File past year taxes He received $200 taxable interest income and earned $2,750 from a part-time job. File past year taxes He does not have to file a tax return because his gross income of $2,950 ($200 interest plus $2,750 in wages) is not more than $3,100, the amount on line 5 of his filled-in Filing Requirement Worksheet for Most Dependents (shown next). File past year taxes Filled-in Example 1 Filing Requirement Worksheet  for Most Dependents 1. File past year taxes Enter dependent's earned income plus $350   $ 3,100 2. File past year taxes Minimum amount   1,000 3. File past year taxes Compare lines 1 and 2. File past year taxes Enter the larger amount   3,100 4. File past year taxes Maximum amount   6,100 5. File past year taxes Compare lines 3 and 4. File past year taxes Enter the smaller amount   3,100 6. File past year taxes Enter the dependent's gross income. File past year taxes If line 6 is more than line 5, the dependent must file an income tax return. File past year taxes If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. File past year taxes   $ 2,950   Example 2. File past year taxes The facts are the same as in Example 1 except that Joe had $600 taxable interest income. File past year taxes He must file a tax return because his gross income of $3,350 ($600 interest plus $2,750 wages) is more than $3,100, the amount on line 5 of his filled-in worksheet (shown next). File past year taxes Filled-in Example 2 Filing Requirement Worksheet for Most Dependents 1. File past year taxes Enter dependent's earned income plus $350   $ 3,100 2. File past year taxes Minimum amount   1,000 3. File past year taxes Compare lines 1 and 2. File past year taxes Enter the larger amount   3,100 4. File past year taxes Maximum amount   6,100 5. File past year taxes Compare lines 3 and 4. File past year taxes Enter the smaller amount   3,100 6. File past year taxes Enter the dependent's gross income. File past year taxes If line 6 is more than line 5, the dependent must file an income tax return. File past year taxes If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more. File past year taxes   $ 3,350   Age 65 or older or blind. File past year taxes A dependent who is age 65 or older or blind must file a return if his or her gross income is more than line 7 of the following worksheet. File past year taxes Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. File past year taxes Enter dependent's earned income plus $350     2. File past year taxes Minimum amount   $1,000 3. File past year taxes Compare lines 1 and 2. File past year taxes Enter the larger amount     4. File past year taxes Maximum amount   6,100 5. File past year taxes Compare lines 3 and 4. File past year taxes Enter the smaller amount     6. File past year taxes Enter the amount from the following table that applies to the dependent       Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. File past year taxes Add lines 5 and 6. File past year taxes Enter the total     8. File past year taxes Enter the dependent's gross income. File past year taxes If line 8 is more than line 7, the dependent must file an income tax return. File past year taxes If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more     Example 3. File past year taxes The facts are the same as in Example 2 except that Joe is also blind. File past year taxes He does not have to file a return because his gross income of $3,350 is not more than $4,600, the amount on line 7 of his filled-in Filing Requirement Worksheet for Dependents Who Are Age 65 or Older or Blind (shown next). File past year taxes   Filled-in Example 3 Filing Requirement Worksheet  for Dependents Who Are Age 65 or Older or Blind 1. File past year taxes Enter dependent's earned income plus $350   $3,100 2. File past year taxes Minimum amount   1,000 3. File past year taxes Compare lines 1 and 2. File past year taxes Enter the larger amount   3,100 4. File past year taxes Maximum amount   6,100 5. File past year taxes Compare lines 3 and 4. File past year taxes Enter the smaller amount   3,100 6. File past year taxes Enter the amount from the following table that applies to the dependent   1,500   Marital Status Amount     Single         Either 65 or older or blind $1,500       65 or older and blind $3,000     Married         Either 65 or older or blind $1,200       65 or older and blind $2,400   7. File past year taxes Add lines 5 and 6. File past year taxes Enter the total   4,600 8. File past year taxes Enter the dependent's gross income. File past year taxes If line 8 is more than line 7, the dependent must file an income tax return. File past year taxes If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 8 is $5 or more   $3,350 Other Filing Requirements Some dependents may have to file a tax return even if their income is less than the amount that would normally require them to file a return. File past year taxes A dependent must file a tax return if he or she owes any other taxes, such as: Social security and Medicare taxes on tips not reported to his or her employer or on wages received from an employer who did not withhold these taxes, Uncollected social security and Medicare or railroad retirement taxes on tips reported to his or her employer or on group-term life insurance, Alternative minimum tax, Additional tax on a health savings account from Form 8889, Part III, Recapture taxes, such as the tax from recapture of an education credit, or Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. File past year taxes But if the dependent is filing a return only because of this tax, the dependent can file Form 5329 by itself. File past year taxes A dependent must also file a tax return if he or she: Had wages of $108. File past year taxes 28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or Had net earnings from self-employment of at least $400. File past year taxes Spouse itemizes. File past year taxes   A dependent must file a return if the dependent's spouse itemizes deductions on a separate return and the dependent has $5 or more of gross income (earned and/or unearned). File past year taxes Should a Return Be Filed Even If Not Required? Even if a dependent does not meet any of the filing requirements discussed earlier, he or she should file a tax return if either of the following applies. File past year taxes Income tax was withheld from his or her income. File past year taxes He or she qualifies for the earned income credit, additional child tax credit, health coverage tax credit, or refundable American opportunity education credit. File past year taxes See the tax return instructions to find out who qualifies for these credits. File past year taxes  By filing a return, the dependent can get a refund. File past year taxes Responsibility for Child's Return Generally, a child is responsible for filing his or her own tax return and for paying any tax, penalties, or interest on that return. File past year taxes If a child cannot file his or her own return for any reason, such as age, the child's parent, guardian, or other legally responsible person must file it for the child. File past year taxes Signing the child's return. File past year taxes   If the child cannot sign his or her return, a parent or guardian must sign the child's name followed by the words “By (signature), parent (or guardian) for minor child. File past year taxes ” Authority of parent or guardian. File past year taxes   A parent or guardian who signs a return on a child's behalf can deal with the IRS on all matters connected with the return. File past year taxes   In general, a parent or guardian who does not sign the child's return can only provide information concerning the child's return and pay the child's tax. File past year taxes That parent or guardian is not entitled to receive information from the IRS or legally bind the child to a tax liability arising from the return. File past year taxes Third party designee. File past year taxes   A child's parent or guardian who does not sign the child's return may be authorized, as a third party designee, to discuss the processing of the return with the IRS as well as provide information concerning the return. File past year taxes The child or the person signing the return on the child's behalf must check the “Yes” box in the “Third Party Designee” area of the return and name the parent or guardian as the designee. File past year taxes   If designated, a parent or guardian can respond to certain IRS notices and receive information about the processing of the return and the status of a refund or payment. File past year taxes This designation does not authorize the parent or guardian to receive any refund check, bind the child to any tax liability, or otherwise represent the child before the IRS. File past year taxes See the return instructions for more information. File past year taxes Designated as representative. File past year taxes   A parent or guardian who does not sign the child's return may be designated as the child's representative by the child or the person signing the return on the child's behalf. File past year taxes Form 2848, Power of Attorney and Declaration of Representative, is used to designate a child's representative. File past year taxes See Publication 947, Practice Before the IRS and Power of Attorney, for more information. File past year taxes   If designated, a parent or guardian can receive information about the child's return but cannot legally bind the child to a tax liability unless authorized to do so by the law of the state in which the child lives. File past year taxes IRS notice. File past year taxes   If you or the child receives a notice from the IRS concerning the child's return or tax liability, you should immediately inform the IRS that the notice concerns a child. File past year taxes The notice will show who to contact. File past year taxes The IRS will try to resolve the matter with the parent(s) or guardian(s) of the child consistent with their authority. File past year taxes Child's earnings. File past year taxes   For federal income tax purposes, amounts a child earns by performing services are included in the gross income of the child and not the gross income of the parent. File past year taxes This is true even if, under state law, the parent has the right to the earnings and may actually have received them. File past year taxes If the child does not pay the tax due on this income, the parent may be liable for the tax. File past year taxes Child's expenses. File past year taxes   Deductions for payments that are made out of a child's earnings are the child's, even if the payments are made by the parent. File past year taxes Example. File past year taxes You made payments on your child's behalf that are deductible as a business expense and a charitable contribution. File past year taxes You made the payments out of your child's earnings. File past year taxes These items can be deducted only on the child's return. File past year taxes Standard Deduction The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the larger of: $1,000, or The individual's earned income plus $350, but not more than the regular standard deduction (generally $6,100). File past year taxes However, the standard deduction may be higher for a dependent who: Is 65 or older, or Is blind. File past year taxes Certain dependents cannot claim any standard deduction. File past year taxes See Standard Deduction of Zero , later. File past year taxes Worksheet 1. File past year taxes   Use Worksheet 1 to figure the dependent's standard deduction. File past year taxes Worksheet 1. File past year taxes Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse, if filing jointly) as a dependent. File past year taxes If you were 65 or older and/or blind, check the correct number of boxes below. File past year taxes Put the total number of boxes checked in box c and go to line 1. File past year taxes a. File past year taxes You 65 or older   Blind   b. File past year taxes Your spouse, if claiming  spouse's exemption 65 or older   Blind   c. File past year taxes Total boxes checked         1. File past year taxes Enter your earned income (defined below) plus $350. File past year taxes If none, enter -0-. File past year taxes 1. File past year taxes     2. File past year taxes Minimum amount. File past year taxes   2. File past year taxes $1,000   3. File past year taxes Compare lines 1 and 2. File past year taxes Enter the larger of the two amounts here. File past year taxes 3. File past year taxes     4. File past year taxes Enter on line 4 the amount shown below for your filing status. File past year taxes       Single or Married filing separately—$6,100 Married filing jointly—$12,200 Head of household—$8,950 4. File past year taxes     5. File past year taxes Standard deduction. File past year taxes         a. File past year taxes Compare lines 3 and 4. File past year taxes Enter the smaller amount here. File past year taxes If under 65 and not blind, stop here. File past year taxes This is your standard deduction. File past year taxes Otherwise, go on to line 5b. File past year taxes 5a. File past year taxes     b. File past year taxes If 65 or older or blind, multiply $1,500 ($1,200 if married) by the number in box c above. File past year taxes Enter the result here. File past year taxes 5b. File past year taxes     c. File past year taxes Add lines 5a and 5b. File past year taxes This is your standard deduction for 2013. File past year taxes 5c. File past year taxes     Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. File past year taxes It also includes any amount received as a scholarship that you must include in income. File past year taxes   Example 1. File past year taxes Michael is single, age 15, and not blind. File past year taxes His parents can claim him as a dependent on their tax return. File past year taxes He has taxable interest income of $800 and wages of $150. File past year taxes He enters $500 (his earned income plus $350) on line 1 of Worksheet 1. File past year taxes On line 3, he enters $1,000, the larger of $500 or $1,000. File past year taxes Michael enters $6,100 on line 4. File past year taxes On line 5a, he enters $1,000, the smaller of $1,000 or $6,100. File past year taxes His standard deduction is $1,000. File past year taxes Example 2. File past year taxes Judy, a full-time student, is single, age 22, and not blind. File past year taxes Her parents can claim her as a dependent on their tax return. File past year taxes She has dividend income of $275 and wages of $2,500. File past year taxes She enters $2,850 (her earned income plus $350) on line 1 of Worksheet 1. File past year taxes On line 3, she enters $2,850, the larger of $2,850 or $1,000. File past year taxes She enters $6,100 on line 4. File past year taxes On line 5a, she enters $2,850 (the smaller of $2,850 or $6,100) as her standard deduction. File past year taxes Example 3. File past year taxes Amy, who is single, is claimed as a dependent on her parents' tax return. File past year taxes She is 18 years old and blind. File past year taxes She has taxable interest income of $1,000 and wages of $2,000. File past year taxes She enters $2,350 (her earned income plus $350) on line 1 of Worksheet 1. File past year taxes She enters $2,350 (the larger of $2,350 or $1,000) on line 3, $6,100 on line 4, and $2,350 (the smaller of $2,350 or $6,100) on line 5a. File past year taxes Because Amy is blind, she checks the box for blindness and enters “1” in box c at the top of Worksheet 1. File past year taxes She enters $1,500 (the number in box c times $1,500) on line 5b. File past year taxes Her standard deduction on line 5c is $3,850 ($2,350 + $1,500). File past year taxes Standard Deduction of Zero The standard deduction for the following dependents is zero. File past year taxes A married dependent filing a separate return whose spouse itemizes deductions. File past year taxes A dependent who files a return for a period of less than 12 months due to a change in his or her annual accounting period. File past year taxes A nonresident or dual-status alien dependent, unless the dependent is married to a U. File past year taxes S. File past year taxes citizen or resident alien at the end of the year and chooses to be treated as a U. File past year taxes S. File past year taxes resident for the year. File past year taxes See Publication 519, U. File past year taxes S. File past year taxes Tax Guide for Aliens, for information on making this choice. File past year taxes Example. File past year taxes Jennifer, who is a dependent of her parents, is entitled to file a joint return with her husband. File past year taxes However, her husband elects to file a separate return and itemize his deductions. File past year taxes Because he itemizes, Jennifer's standard deduction on her return is zero. File past year taxes She can, however, itemize any of her allowable deductions. File past year taxes Dependent's Own Exemption A person who can be claimed as a dependent on another taxpayer's return cannot claim his or her own exemption. File past year taxes This is true even if the other taxpayer does not actually claim the exemption. File past year taxes Example. File past year taxes James and Barbara can claim their child, Ben, as a dependent on their return. File past year taxes Ben is a college student who works during the summer and must file a tax return. File past year taxes Ben cannot claim his own exemption on his return. File past year taxes This is true even if James and Barbara do not claim him as a dependent on their return. File past year taxes Withholding From Wages Employers generally withhold federal income tax, social security tax, and Medicare tax from an employee's wages. File past year taxes If the employee claims exemption from withholding on Form W-4, the employer will not withhold federal income tax. File past year taxes The exemption from withholding does not apply to social security and Medicare taxes. File past year taxes Conditions for exemption from withholding. File past year taxes   An employee can claim exemption from withholding for 2014 only if he or she meets both of the following conditions. File past year taxes For 2013, the employee had a right to a refund of all federal income tax withheld because he or she had no tax liability. File past year taxes For 2014, the employee expects a refund of all federal income tax withheld because he or she expects to have no tax liability. File past year taxes Dependents. File past year taxes   An employee who is a dependent ordinarily cannot claim exemption from withholding if both of the following are true. File past year taxes The employee's gross income will be more than $1,000, the minimum standard deduction for 2014. File past year taxes The employee's unearned income will be more than $350. File past year taxes Exceptions. File past year taxes   An employee may be able to claim exemption from withholding even if the employee is a dependent, if the employee: Is age 65 or older, Is blind, or Will claim on his or her 2014 tax return: Adjustments to income, Tax credits, or Itemized deductions. File past year taxes The above exceptions do not apply to supplemental wages greater than $1,000,000. File past year taxes For more information, see Exemption From Withholding in chapter 1 of Publication 505. File past year taxes Example. File past year taxes Guy is 17 and a student. File past year taxes During the summer he works part time at a grocery store. File past year taxes He expects to earn about $1,200 this year. File past year taxes He also worked at the store last summer and received a refund of all his withheld income tax because he did not have a tax liability. File past year taxes The only other income he expects during the year is $375 interest on a savings account. File past year taxes He expects that his parents will be able to claim him as a dependent on their tax return. File past year taxes He is not blind and will not claim adjustments to income, itemized deductions, a higher standard deduction, or tax credits on his return. File past year taxes Guy cannot claim exemption from withholding when he fills out Form W-4 because his parents will be able to claim him as a dependent, his gross income will be more than $1,000 (the minimum standard deduction amount) and his unearned income will be more than $350. File past year taxes Claiming exemption from withholding. File past year taxes    To claim exemption from withholding, an employee must enter “Exempt” in the space provided on Form W-4, line 7. File past year taxes The employee must complete the rest of the form, as explained in the form instructions, and give it to his or her employer. File past year taxes Renewing an exemption from withholding. File past year taxes   An exemption from withholding is good for only one year. File past year taxes An employee must file a new Form W-4 by February 15 each year to continue the exemption. File past year taxes Part 2. File past year taxes Tax on Unearned Income of Certain Children The two rules that follow may affect the tax on the unearned income of certain children. File past year taxes If the child's interest and dividend income (including capital gain distributions) total less than $10,000, the child's parent may be able to choose to include that income on the parent's return rather than file a return for the child. File past year taxes (See Parent's Election To Report Child's Interest and Dividends , later. File past year taxes ) If the child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. File past year taxes (See Tax for Certain Children Who Have Unearned Income , later. File past year taxes ) For these rules, the term “child” includes a legally adopted child and a stepchild. File past year taxes These rules apply whether or not the child is a dependent. File past year taxes These rules do not apply if neither of the child's parents were living at the end of the year. File past year taxes Which Parent's Return To Use If a child's parents are married to each other and file a joint return, use the joint return to figure the tax on the child's unearned income. File past year taxes The tax rate and other return information from that return are used to figure the child's tax as explained later under Tax for Certain Children Who Have Unearned Income . File past year taxes Parents Who Do Not File a Joint Return For parents who do not file a joint return, the following discussions explain which parent's tax return must be used to figure the tax. File past year taxes Only the parent whose tax return is used can make the election described under Parent's Election To Report Child's Interest and Dividends . File past year taxes Parents are married. File past year taxes   If the child's parents file separate returns, use the return of the parent with the greater taxable income. File past year taxes Parents not living together. File past year taxes   If the child's parents are married to each other but not living together, and the parent with whom the child lives (the custodial parent) is considered unmarried, use the return of the custodial parent. File past year taxes If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. File past year taxes   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in Publication 501. File past year taxes Parents are divorced. File past year taxes   If the child's parents are divorced or legally separated, and the parent who had custody of the child for the greater part of the year (the custodial parent) has not remarried, use the return of the custodial parent. File past year taxes Custodial parent remarried. File past year taxes   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. File past year taxes Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. File past year taxes Do not use the return of the noncustodial parent. File past year taxes   If the custodial parent and the stepparent are married, but file separate returns, use the return of the one with the greater taxable income. File past year taxes If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. File past year taxes Parents never married. File past year taxes   If a child's parents have never been married to each other, but lived together all year, use the return of the parent with the greater taxable income. File past year taxes If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. File past year taxes Widowed parent remarried. File past year taxes   If a widow or widower remarries, the new spouse is treated as the child's other parent. File past year taxes The rules explained earlier under Custodial parent remarried apply. File past year taxes Parent's Election To Report Child's Interest and Dividends You may be able to elect to include your child's interest and dividend income (including capital gain distributions) on your tax return. File past year taxes If you do, your child will not have to file a return. File past year taxes You can make this election only if all the following conditions are met. File past year taxes Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. File past year taxes Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). File past year taxes The child's gross income was less than $10,000. File past year taxes The child is required to file a return unless you make this election. File past year taxes The child does not file a joint return for the year. File past year taxes No estimated tax payment was made for the year, and no overpayment from the previous year (or from any amended return) was applied to this year under your child's name and social security number. File past year taxes No federal income tax was withheld from your child's income under the backup withholding rules. File past year taxes You are the parent whose return must be used when applying the special tax rules for children. File past year taxes (See Which Parent's Return To Use , earlier. File past year taxes ) These conditions are also shown in Figure 1. File past year taxes Certain January 1 birthdays. File past year taxes   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. File past year taxes You cannot make this election for such a child unless the child was a full-time student. File past year taxes   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. File past year taxes You cannot make this election for such a child. File past year taxes How to make the election. File past year taxes    Make the election by attaching Form 8814 to your Form 1040 or Form 1040NR. File past year taxes (If you make this election, you cannot file Form 1040A or Form 1040EZ. File past year taxes ) Attach a separate Form 8814 for each child for whom you make the election. File past year taxes You can make the election for one or more children and not for others. File past year taxes Effect of Making the Election The federal income tax on your child's income may be more if you make the Form 8814 election. File past year taxes Rate may be higher. File past year taxes   If your child received qualified dividends or capital gain distributions, you may pay up to $100 more tax if you make this election instead of filing a separate tax return for the child. File past year taxes This is because the tax rate on the child's income between $1,000 and $2,000 is 10% if you make this election. File past year taxes However, if you file a separate return for the child, the tax rate may be as low as 0% (zero percent) because of the preferential tax rates for qualified dividends and capital gain distributions. File past year taxes Deductions you cannot take. File past year taxes   By making the Form 8814 election, you cannot take any of the following deductions that the child would be entitled to on his or her return. File past year taxes The additional standard deduction if the child is blind. File past year taxes The deduction for a penalty on an early withdrawal of your child's savings. File past year taxes Itemized deductions (such as your child's investment expenses or charitable contributions). File past year taxes Figure 1. File past year taxes Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. File past year taxes Figure 1. File past year taxes Can You Include Your Child's Income On Your Tax Return? Deductible investment interest. File past year taxes   If you use Form 8814, your child's unearned income is considered your unearned income. File past year taxes To figure the limit on your deductible investment interest, add the child's unearned income to yours. File past year taxes However, if your child received qualified dividends, capital gain distributions, or Alaska Permanent Fund dividends, see chapter 3 of Publication 550 for information about how to figure the limit. File past year taxes Alternative minimum tax. File past year taxes    If your child received tax-exempt interest (or exempt-interest dividends paid by a regulated investment company) from certain private activity bonds, you must determine if that interest is a tax preference item for alternative minimum tax (AMT) purposes. File past year taxes If it is, you must include it with your own tax preference items when figuring your AMT. File past year taxes See Form 6251, Alternative Minimum Tax—Individuals, and its instructions for details. File past year taxes Reduced deductions or credits. File past year taxes   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return, including the following. File past year taxes Deduction for contributions to a traditional individual retirement arrangement (IRA). File past year taxes Deduction for student loan interest. File past year taxes Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. File past year taxes Credit for child and dependent care expenses. File past year taxes Child tax credit. File past year taxes Education tax credits. File past year taxes Earned income credit. File past year taxes Penalty for underpayment of estimated tax. File past year taxes   If you make this election for 2013 and did not have enough tax withheld or pay enough estimated tax to cover the tax you owe, you may be subject to a penalty. File past year taxes If you plan to make this election for 2014, you may need to increase your federal income tax withholding or your estimated tax payments to avoid the penalty. File past year taxes Get Publication 505 for more information. File past year taxes Figuring Child's Income Use Form 8814, Part I, to figure your child's interest and dividend income to report on your return. File past year taxes Only the amount over $2,000 is added to your income. File past year taxes The amount over $2,000 is shown on Form 8814, line 6. File past year taxes Unless the child's income includes qualified dividends or capital gain distributions (discussed next), the same amount is shown on Form 8814, line 12. File past year taxes Include the amount from Form 8814, line 12, on Form 1040 or Form 1040NR, line 21. File past year taxes If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040 or Form 1040NR, line 21. File past year taxes On the dotted line next to line 21, enter “Form 8814” and the total of the Form 8814, line 12 amounts. File past year taxes Note. File past year taxes The tax on the first $2,000 is figured on Form 8814, Part II. File past year taxes See Figuring Additional Tax , later. File past year taxes Qualified dividends. File past year taxes   Enter on Form 8814, line 2a, any ordinary dividends your child received. File past year taxes This amount may include qualified dividends. File past year taxes Qualified dividends are those dividends reported on Form 1040, line 9b, or Form 1040NR, line 10b, and are eligible for lower tax rates that apply to a net capital gain. File past year taxes For detailed information about qualified dividends, see Publication 550. File past year taxes   If your child received qualified dividends, the amount of these dividends that is added to your income must be reported on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. File past year taxes You do not include these dividends on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. File past year taxes   Enter the child's qualified dividends on Form 8814, line 2b. File past year taxes But do not include this amount on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. File past year taxes Instead, include the amount from Form 8814, line 9, on Form 1040, lines 9a and 9b, or Form 1040NR, lines 10a and 10b. File past year taxes (The amount on Form 8814, line 9, may be less than the amount on Form 8814, line 2b, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. File past year taxes ) Capital gain distributions. File past year taxes   Enter on Form 8814, line 3, any capital gain distributions your child received. File past year taxes The amount of these distributions that is added to your income must be reported on Schedule D (Form 1040), line 13, or, if you are not required to file Schedule D, on Form 1040, line 13, or Form 1040NR, line 14. File past year taxes You do not include it on Form 8814, line 12, or on line 21 of Form 1040 or Form 1040NR. File past year taxes   Include the amount from Form 8814, line 10, on Schedule D, line 13; Form 1040, line 13; or Form 1040NR, line 14, whichever applies. File past year taxes (The amount on Form 8814, line 10, may be less than the amount on Form 8814, line 3, because lines 7 through 12 of the form divide the $2,000 base amount on Form 8814, line 5, between the child's qualified dividends, capital gain distributions, and other interest and dividend income, reducing each of those amounts. File past year taxes ) Collectibles (28% rate) gain. File past year taxes    If any of the child's capital gain distributions are reported on Form 1099-DIV as collectibles (28% rate) gain, you must determine how much to also include on line 4 of the 28% Rate Gain Worksheet, in the instructions for Schedule D, line 18. File past year taxes Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. File past year taxes The numerator is the part of the child's total capital gain distribution that is collectibles (28% rate) gain. File past year taxes The denominator is the child's total capital gain distribution. File past year taxes Enter the result on line 4 of the 28% Rate Gain Worksheet. File past year taxes Unrecaptured section 1250 gain. File past year taxes   If any of the child's capital gain distributions are reported on Form 1099-DIV as unrecaptured section 1250 gain, you must determine how much to include on line 11 of the Unrecaptured Section 1250 Gain Worksheet in the instructions for Schedule D, line 19. File past year taxes Multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. File past year taxes The numerator is the part of the child's total capital gain distribution that is unrecaptured section 1250 gain. File past year taxes The denominator is the child's total capital gain distribution. File past year taxes Enter the result on the Unrecaptured Section 1250 Gain Worksheet, line 11. File past year taxes Section 1202 gain. File past year taxes   If any of the child's capital gain distributions are reported as section 1202 gain (gain on qualified small business stock) on Form 1099-DIV, part or all of that gain may be eligible for the section 1202 exclusion. File past year taxes (For information about the exclusion, see chapter 4 of Publication 550. File past year taxes ) To figure that part, multiply the child's capital gain distribution included on Schedule D, line 13, by a fraction. File past year taxes The numerator is the part of the child's total capital gain distribution that is section 1202 gain. File past year taxes The denominator is the child's total capital gain distribution. File past year taxes Your section 1202 exclusion is generally 50% of the result, but may be subject to a limit. File past year taxes In some cases, the exclusion is more than 50%. File past year taxes See the instructions for Schedule D for details and information on how to report the exclusion amount. File past year taxes Example. File past year taxes Fred is 6 years old. File past year taxes In 2013, he received dividend income of $2,100, which included $1,575 of ordinary dividends and a $525 capital gain distribution from a mutual fund. File past year taxes (None of the distributions were reported on Form 1099-DIV as unrecaptured section 1250 gain, section 1202 gain, or collectibles (28% rate) gain. File past year taxes ) All of the ordinary dividends are qualified dividends. File past year taxes He has no other income and is not subject to backup withholding. File past year taxes No estimated tax payments were made under his name and social security number. File past year taxes Fred's parents elect to include Fred's income on their tax return instead of filing a return for him. File past year taxes They figure the amount to report on Form 1040, lines 9a and 9b, the amount to report on their Schedule D, line 13, and the amount to report on Form 1040, line 21, as follows. File past year taxes They leave lines 1a and 1b of Form 8814 blank because Fred does not have any interest income. File past year taxes They enter his ordinary dividends of $1,575 on lines 2a and 2b because all of Fred's ordinary dividends are qualified dividends. File past year taxes They enter the amount of Fred's capital gain distributions, $525, on line 3. File past year taxes Next, they add the amounts on lines 1a, 2a, and 3 and enter the result, $2,100, on line 4. File past year taxes They subtract the base amount on line 5, $2,000, from the amount on line 4, $2,100, and enter the result, $100, on line 6. File past year taxes This is the total amount from Form 8814 to be reported on their return. File past year taxes Next, they figure how much of this amount is qualified dividends and how much is capital gain distributions. File past year taxes They divide the amount on line 2b, $1,575, by the amount on line 4, $2,100. File past year taxes They enter the result, . File past year taxes 75, on line 7. File past year taxes They divide the amount on line 3, $525, by the amount on line 4, $2,100. File past year taxes They enter the result, . File past year taxes 25, on line 8. File past year taxes They multiply the amount on line 6, $100, by the decimal on line 7, . File past year taxes 75, and enter the result, $75, on line 9. File past year taxes They multiply the amount on line 6, $100, by the decimal on line 8, . File past year taxes 25, and enter the result, $25, on line 10. File past year taxes They include the amount from line 9, $75, on lines 9a and 9b of their Form 1040 and enter “Form 8814 – $75” on the dotted lines next to lines 9a and 9b. File past year taxes They include the amount from line 10, $25, on line 13 of their Schedule D (Form 1040) and enter “Form 8814 – $25” on the dotted line next to Schedule D, line 13. File past year taxes They enter $100 ($75 + $25) on line 11 and -0- ($100 – $100) on line 12. File past year taxes Because the amount on line 12 is -0-, they do not include any amount from Form 8814 on their Form 1040, line 21. File past year taxes Figuring Additional Tax Use Form 8814, Part II, to figure the tax on the $2,000 of your child's interest and dividends that you do not include in your income. File past year taxes This tax is added to the tax figured on your income. File past year taxes This additional tax is the smaller of: 10% x (your child's gross income − $1,000), or $100. File past year taxes Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44, or Form 1040NR, line 42. File past year taxes Check box a on Form 1040, line 44, or Form 1040NR, line 42. File past year taxes Tax for Certain Children Who Have Unearned Income If a child's interest, dividends, and other unearned income total more than $2,000, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. File past year taxes If the parent does not or cannot choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. File past year taxes Attach the completed form to the child's Form 1040, Form 1040A, or Form 1040NR. File past year taxes When Form 8615 must be filed. File past year taxes   Form 8615 must be filed for a child if all of the following statements are true. File past year taxes The child's unearned income was more than $2,000. File past year taxes The child is required to file a return for 2013. File past year taxes The child either: Was under age 18 at the end of the year, Was age 18 at the end of the year and did not have earned income that was more than half of his or her support, or Was over age 18 and under age 24 at the end of the year, was a full-time student, and did not have earned income that was more than half of his or her support. File past year taxes At least one of the child's parents was alive at the end of 2013. File past year taxes The child does not file a joint return for 2013. File past year taxes These conditions are also shown in Figure 2. File past year taxes Certain January 1 birthdays. File past year taxes   Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under When Form 8615 must be filed. File past year taxes IF a child was born on. File past year taxes . File past year taxes . File past year taxes THEN, at the end of 2013, the child is considered to be. File past year taxes . File past year taxes . File past year taxes January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. File past year taxes The child meets condition 3 only if the child did not have earned income that was more than half of the child's support. File past year taxes  **This child meets condition 3 only if the child was a full-time student who did not have earned income that was more than half of the child's support. File past year taxes  ***Do not use Form 8615 for this child. File past year taxes Figure 2. File past year taxes Do You Have To Use Form 8615 To Figure Your Child's Tax? Please click here for the text description of the image. File past year taxes Figure 2. File past year taxes Do You Have To Use Form 8615 To Figure Your Child's Tax? Providing Parental Information (Form 8615, Lines A–C) On Form 8615, lines A and B, enter the parent's name and social security number. File past year taxes (If the parents filed a joint return, enter the name and social security number listed first on the joint return. File past year taxes ) On line C, check the box for the parent's filing status. File past year taxes See Which Parent's Return To Use, earlier, for information on which parent's return information must be used on Form 8615. File past year taxes Parent with different tax year. File past year taxes   If the parent 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 the child's tax year. File past year taxes Example. File past year taxes Kimberly must use her mother's tax and taxable income to complete her Form 8615 for calendar year 2013 (January 1 – December 31). File past year taxes Kimberly's mother files her tax return on a fiscal year basis (July 1 – June 30). File past year taxes Kimberly must use the information on her mother's return for the tax year ending June 30, 2013, to complete her 2013 Form 8615. File past year taxes Parent's return information not known timely. File past year taxes   If the information needed from the parent's return is not known by the time the child's return is due (usually April 15), you can file the return using estimates. File past year taxes   You can use any reasonable estimate. File past year taxes This includes using information from last year's return. File past year taxes If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. File past year taxes   When you get the correct information, file an amended return on Form 1040X, Amended U. File past year taxes S. File past year taxes Individual Income Tax Return. File past year taxes Extension of time to file. File past year taxes   Instead of using estimates, you can get an automatic 6-month extension of time to file if, by the date your return is due, you file Form 4868, Application for Automatic Extension of Time To File U. File past year taxes S. File past year taxes Individual Income Tax Return. File past year taxes See the instructions for Form 4868 for details. File past year taxes    An extension of time to file is not an extension of time to pay. File past year taxes You must make an accurate estimate of the tax for 2013. File past year taxes If you do not pay the full amount due by the regular due date, the child will owe interest and may also be charged penalties. File past year taxes See Form 4868 and its instructions. File past year taxes Parent's return information not available. File past year taxes   If a child cannot get the required information about his or her parent's tax return, the child (or the child's legal representative) can request the necessary information from the Internal Revenue Service (IRS). File past year taxes How to request. File past year taxes   After the end of the tax year, send a signed, written request for the information to the Internal Revenue Service Center where the parent's return will be filed. File past year taxes (The IRS cannot process a request received before the end of the tax year. File past year taxes )    You should also consider getting an extension of time to file the child's return, because there may be a delay in getting the requested information. File past year taxes   The request must contain all of the following. File past year taxes A statement that you are making the request to comply with section 1(g) of the Internal Revenue Code and that you have tried to get the information from the parent. File past year taxes Proof of the child's age (for example, a copy of the child's birth certificate). File past year taxes Evidence the child has more than $2,000 of unearned income (for example, a copy of the child's prior year tax return or copies of Forms 1099 for the current year). File past year taxes The name, address, social security number (if known), and filing status (if known) of the parent whose information is to be shown on Form 8615. File past year taxes    A child's legal representative making the request should include a copy of his or her Power of Attorney, such as Form 2848, or proof of legal guardianship. File past year taxes Step 1. File past year taxes Figuring the Child's Net Unearned Income (Form 8615, Part I) The first step in figuring a child's tax using Form 8615 is to figure the child's net unearned income. File past year taxes To do that, use Form 8615, Part I. File past year taxes Line 1 (Unearned Income) If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. File past year taxes Adjusted gross income is shown on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. File past year taxes Form 1040EZ and Form 1040NR-EZ cannot be used if Form 8615 must be filed. File past year taxes If the child had earned income, figure the amount to enter on Form 8615, line 1, by using the worksheet in the instructions for the form. File past year taxes However, use the following worksheet if: the child has excluded any foreign earned income, deducted a loss from self-employment, or has a net operating loss from another year. File past year taxes Alternate Worksheet for Form 8615, Line 1 A. File past year taxes Enter the amount from the child's Form 1040, line 22, or Form 1040NR, line 23   B. File past year taxes Enter the total of any net loss  from self-employment, any net operating loss deduction, any foreign earned income exclusion, and any foreign housing exclusion from the child's Form 1040 or Form 1040NR. File past year taxes Enter this total as a positive number (greater than zero)   C. File past year taxes Add line A and line B and  enter the total   D. File past year taxes Enter the child's earned income plus any amount from the child's Form 1040, line 30, or the child's Form 1040NR, line 30     Generally, the child's earned income is the total of the amounts reported on Form 1040, lines 7, 12, and 18 (if line 12 or 18 is a loss, use zero) or Form 1040NR, lines 8, 13, and 19 (if line 13 or 19 is a loss, use zero)   E. File past year taxes Subtract line D from line C. File past year taxes Enter the result here and on Form 8615, line 1   Unearned income defined. File past year taxes   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually performed. File past year taxes It includes taxable interest, dividends, capital gains (including capital gain distributions), the taxable part of social security and pension payments, certain distributions from trusts, and unemployment compensation. File past year taxes Unearned income includes amounts produced by assets the child obtained with earned income (such as interest on a savings account into which the child deposited wages). File past year taxes Nontaxable income. File past year taxes   For this purpose, unearned income includes only amounts the child must include in gross income. File past year taxes Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. File past year taxes Capital loss. File past year taxes   A child's capital losses are taken into account in figuring the child's unearned income. File past year taxes Capital losses are first applied against capital gains. File past year taxes If the capital losses are more than the capital gains, the difference (up to $3,000) is subtracted from the child's interest, dividends, and other unearned income. File past year taxes Any difference over $3,000 is carried to the next year. File past year taxes Income from property received as a gift. File past year taxes   A child's unearned income includes all income produced by property belonging to the child. File past year taxes This is true even if the property was transferred to the child, regardless of when the property was transferred or purchased or who transferred it. File past year taxes   A child's unearned income includes income produced by property given as a gift to the child. File past year taxes This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. File past year taxes Example. File past year taxes Amanda Black, age 13, received the following income. File past year taxes Dividends—$800 Wages—$2,100 Taxable interest—$1,200 Tax-exempt interest—$100 Capital gains—$300 Capital losses—($200) The dividends were qualified dividends on stock given to her by her grandparents. File past year taxes Amanda's unearned income is $2,100. File past year taxes This is the total of the dividends ($800), taxable interest ($1,200), and capital gains reduced by capital losses ($300 − $200 = $100). File past year taxes Her wages are earned (not unearned) income because they are received for work actually performed. File past year taxes Her tax-exempt interest is not included because it is nontaxable. File past year taxes Trust income. File past year taxes   If a child is the beneficiary of a trust, distributions of taxable interest, dividends, capital gains, and other unearned income from the trust are unearned income to the child. File past year taxes   However, taxable distributions from a qualified disability trust are considered earned income for the purposes of completing Form 8615. File past year taxes See the Form 8615 instructions for details. File past year taxes Adjustment to income. File past year taxes   In figuring the amount to enter on line 1, the child's unearned income is reduced by any penalty on the early withdrawal of savings. File past year taxes Line 2 (Deductions) If the child does not itemize deductions on Schedule A (Form 1040 or Form 1040NR), enter $2,000 on line 2. File past year taxes If the child itemizes deductions, enter on line 2 the larger of: $1,000 plus the portion of the child's itemized deductions on Schedule A (Form 1040), line 29 (or Schedule A (Form 1040NR), line 15), that are directly connected with the production of the unearned income entered on line 1, or $2,000. File past year taxes Directly connected. File past year taxes   Itemized deductions are directly connected with the production of unearned income if they are for expenses paid to produce or collect taxable income or to manage, conserve, or maintain property held for producing income. File past year taxes These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. File past year taxes    These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). File past year taxes Only the amount greater than 2% of the child's adjusted gross income can be deducted. File past year taxes See Publication 529, Miscellaneous Deductions, for more information. File past year taxes Example 1. File past year taxes Roger, age 12, has unearned income of $8,000, no other income, no adjustments to income, and itemized deductions of $300 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with his unearned income. File past year taxes His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. File past year taxes Roger enters $2,000 on line 2 because that is more than the total of $1,000 plus his directly-connected itemized deductions of $300. File past year taxes Example 2. File past year taxes Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. File past year taxes She has no other income. File past year taxes She has itemized deductions of $1,050 (net of the 2%-of-adjusted-gross-income limit) that are directly connected with the production of her unearned income. File past year taxes Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). File past year taxes The amount on line 2 is $2,050. File past year taxes This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. File past year taxes Line 3 Subtract line 2 from line 1 and enter the result on this line. File past year taxes If zero or less, do not complete the rest of the form. File past year taxes However, you must still attach Form 8615 to the child's tax return. File past year taxes Figure the tax on the child's taxable income in the normal manner. File past year taxes Line 4 (Child's Taxable Income) Enter on line 4 the child's taxable income from Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. File past year taxes Child files Form 2555 or 2555-EZ. File past year taxes   If the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) is used to figure the child's tax. File past year taxes Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the child's taxable income on Form 8615, line 4. File past year taxes Line 5 (Net Unearned Income) A child's net unearned income cannot be more than his or her taxable income. File past year taxes Enter on Form 8615, line 5, the smaller of line 3 or line 4. File past year taxes This is the child's net unearned income. File past year taxes If zero or less, do not complete the rest of the form. File past year taxes However, you must still attach Form 8615 to the child's tax return. File past year taxes Figure the tax on the child's taxable income in the normal manner. File past year taxes Step 2. File past year taxes Figuring a Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) The next step in completing Form 8615 is to figure a tentative tax on the child's net unearned income at the parent's tax rate. File past year taxes The tentative tax at the parent's tax rate is the difference between the tax on the parent's taxable income figured with the child's net unearned income (plus the net unearned income of any other child whose Form 8615 includes the tax return information of that parent) and the tax figured without it. File past year taxes When figuring the tentative tax at the parent's tax rate on Form 8615, do not refigure any of the exclusions, deductions, or credits on the parent's return because of the child's net unearned income. File past year taxes For example, do not refigure the medical expense deduction. File past year taxes Figure the tentative tax on Form 8615, lines 6 through 13. File past year taxes Line 6 (Parent's Taxable Income) Enter on line 6 the amount from the parent's Form 1040, line 43; Form 1040A, line 27; Form 1040EZ, line 6; Form 1040NR, line 41; or Form 1040NR-EZ, line 14. File past year taxes If the parent's taxable income is zero or less, enter zero on line 6. File past year taxes Parent files Form 2555 or 2555-EZ. File past year taxes   If the parent files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, the Foreign Earned Income Tax Worksheet in the Form 1040 instructions is used to figure the parent's tax. File past year taxes Enter the amount from line 3 of the Foreign Earned Income Tax Worksheet as the parent's taxable income, on line 6 of Form 8615. File past year taxes Line 7 (Net Unearned Income of Other Children) If the tax return information of the parent is also used on any other child's Form 8615, enter on line 7 the total of the amounts from line 5 of all the other children's Forms 8615. File past year taxes Do not include the amount from line 5 of the Form 8615 being completed. File past year taxes (The term “other child” means any other child whose Form 8615 uses the tax information of the parent identified on Lines A and B of Form 8615. File past year taxes ) Example. File past year taxes Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. File past year taxes The children's net unearned income amounts on line 5 of their Forms 8615 are: Sharon—$800 Jerry—$600 Mike—$1,000 Line 7 of Sharon's Form 8615 will show $1,600, the total of the amounts on line 5 of Jerry's and Mike's Forms 8615. File past year taxes Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). File past year taxes Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). File past year taxes Other children's information not available. File past year taxes   If the net unearned income of the other children is not available when the return is due, either file the return using estimates or get an extension of time to file. File past year taxes Estimates and extensions are discussed earlier under Providing Parental Information (Form 8615, Lines A–C) . File past year taxes Line 8 (Parent's Taxable Income Plus Children's Net Unearned Income) Enter on this line the total of lines 5, 6, and 7. File past year taxes You must determine the amount of net capital gain and qualified dividends included on this line before completing Form 8615, line 9. File past year taxes Net capital gain. File past year taxes   Net capital gain is the smaller of the gain, if any, on Schedule D (Form 1040), line 15, or the gain, if any, on Schedule D, line 16. File past year taxes If Schedule D is not required, it is the amount on Form 1040, line 13; Form 1040A, line 10; or Form 1040NR, line 14. File past year taxes Qualified dividends. File past year taxes   Qualified dividends are those dividends reported on line 9b of Form 1040 or Form 1040A, or line 10b of Form 1040NR. File past year taxes Net capital gain and qualified dividends on line 8. File past year taxes   If neither the child, nor the parent, nor any other child has net capital gain, the net capital gain on line 8 is zero. File past year taxes   If neither the child, nor the parent, nor any other child has qualified dividends, the amount of qualified dividends on line 8 is zero. File past year taxes   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 of Form 8615. File past year taxes   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. File past year taxes   Use the instructions for Form 8615, line 8, including the appropriate Line 5 Worksheet, to find these amounts. File past year taxes See the instructions for Form 8615 for more details. File past year taxes Note. File past year taxes The amount of any net capital gain or qualified dividends is not separately reported on line 8. File past year taxes It is  needed, however, when figuring the tax on line 9. File past year taxes Line 9 (Tax on Parent's Taxable Income Plus Children's Net Unearned Income) Figure the tax on the amount on line 8 using the Tax Table, the Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax Worksheet (in the Form 1040, 1040A, or 1040NR instructions), the Schedule D Tax Worksheet (in the Schedule D instructions), or Schedule J (Form 1040), as follows. File past year taxes If line 8 does not include any net capital gain or qualified dividends, use the Tax Table or Tax Computation Worksheet to figure this tax. File past year taxes But if Schedule J, Income Averaging for Farmers and Fishermen, is used to figure the tax on the parent's return, use it to figure this tax. File past year taxes If line 8 includes any net capital gain or qualified dividends, use the Qualified Dividends and Capital Gain Tax Worksheet to figure this tax. File past year taxes For details, see the instructions for Form 8615, line 9. File past year taxes However, if the child, parent, or any other child has 28% rate gain or unrecaptured section 1250 gain, use the Schedule D Tax Worksheet. File past year taxes But if Schedule J is used to figure the tax on the parent's return, use it to figure this tax. File past year taxes Child files Form 2555 or 2555-EZ. File past year taxes   If line 8 includes any net capital gain or qualified dividends and the child, or any other child filing Form 8615, also files Form 2555 or 2555-EZ, use Using the Schedule D Tax Worksheet for line 9 tax, next, to figure the line 9 tax. File past year taxes Using the Schedule D Tax Worksheet for line 9 tax. File past year taxes    Use the Schedule D Tax Worksheet (in the Schedule D instructions) to figure the line 9 tax on Form 8615 if the child, parent, or any other child has unrecaptured section 1250 gain or 28% rate gain. File past year taxes If you must use the Schedule D Tax Worksheet, first complete any Schedule D and any actual Schedule D Tax Worksheet required for the child, parent, or any other child. File past year taxes Then figure the line 9 tax using another Schedule D Tax Worksheet. File past year taxes (Do not attach this Schedule D Tax Worksheet to the child's return. File past year taxes )   Complete this Schedule D Tax Worksheet as follows. File past year taxes On line 1, enter the amount from Form 8615, line 8. File past year taxes On line 2, enter the qualified dividends included on Form 8615, line 8. File past year taxes (See the earlier discussion for line 8. File past year taxes ) On line 3, enter the total of the amounts, if any, on line 4g of all Forms 4952 filed by the child, parent, or any other child. File past year taxes On line 4, enter the total of the amounts, if any, on line 4e of all Forms 4952 filed by the child, parent, or any other child. File past year taxes If applicable, include instead the smaller amount entered on the dotted line next to line 4e. File past year taxes On lines 5 and 6, follow the worksheet instructions. File past year taxes On line 7, enter the net capital gain included on Form 8615, line 8. File past year taxes (See the earlier discussion for line 8. File past year taxes ) On lines 8 through 10, follow the worksheet instructions. File past year taxes On line 11, enter zero if neither the child, nor the parent, nor any other child has unrecaptured section 1250 gain (Schedule D, line 19) or 28% rate gain (Schedule D, line 18). File past year taxes Otherwise, enter the amount of unrecaptured section 1250 gain and 28% rate gain included in the net capital gain on line 8 of Form 8615. File past year taxes Figure these amounts as explained later under Figuring unrecaptured section 1250 gain (line 11) and Figuring 28% rate gain (line 11). File past year taxes If the Foreign Earned Income Tax Worksheet was used to figure the parent's tax or the tax of any child, go to step 10 below. File past year taxes Otherwise, skip steps 10, 11, and 12 below, and go to step 13. File past year taxes Determine whether there is a line 8 capital gain excess as follows. File past year taxes Add the amounts on line 2 of all Foreign Earned Income Tax Worksheets completed by the parent or any child for whom Form 8615 is filed. File past year taxes (But for each child do not add more than the excess, if any, of the amount on line 5 of the child's Form 8615 over the child's taxable income on Form 1040, line 43; Form 1040A, line 27; or Form 1040NR, line 41. File past year taxes ) Subtract (a) from the amount on line 1 of this Schedule D Tax Worksheet. File past year taxes Subtract (b) from the amount on line 10 of this Schedule D Tax Worksheet. File past year taxes If the result is more than zero, that amount is the line 8 capital gain excess. File past year taxes If the result is zero or less, there is no line 8 capital gain excess. File past year taxes If there is no line 8 capital gain excess, skip step 12 below and go to step 13. File past year taxes If there is a line 8 capital gain excess, complete a second Schedule D Tax Worksheet as instructed above and in step 13, but in its entirety and with the following additional modifications. File past year taxes (These modifications are to be made only for purposes of filling out this additional Schedule D Tax Worksheet. File past year taxes ) Reduce the amount you would otherwise enter on line 9 (but not below zero) by the line 8 capital gain excess. File past year taxes Reduce the amount you would otherwise enter on line 6 (but not below zero) by any of the line 8 capital gain excess not used in (a) above. File past year taxes If the child, parent, or any other child has 28% rate gain, reduce the amount you would otherwise enter on line 8 of Worksheet 1 for Line 11 of the Schedule D Tax Worksheet – 28% Rate Gain (Line 9 Tax), shown later, (but not below zero) by the line 8 capital gain excess, and refigure the amount on line 11 of this Schedule D Tax Worksheet. File past year taxes If the child, parent, or any other child has unrecaptured section 1250 gain, reduce the amount you would otherwise enter on line 8 of Worksheet 2 for Line 11 of the Schedule D Tax Worksheet – Unrecaptured Section 1250 Gain (Line 9 Tax) (but not below zero) by the line 8 capital gain excess not used in 12(c), and refigure the amount on line 11 of this Schedule D Tax Worksheet. File past year taxes Complete lines 12 through 45 following the worksheet instructions. File past year taxes Use the parent's filing status to complete lines 15, 42, and 44. File past year taxes Enter the amount from line 45 of this Schedule D Tax Worksheet on Form 8615, line 9, and check the box on that line
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Smart Grocery Shopping

It can be a challenge to make healthy food choices and stay within your food budget. Here are some tips to help you get the most from your grocery budget:

  • Take an inventory of the food you already have in your home. Plan your meals for the week, keeping in mind what you already have in your pantry.
  • Make a shopping list and stick to it.
  • Compare unit prices (cost per ounce or pound) to determmine if you are getting the best deal.
  • Buy the generic store brand versions of foods.
  • Take advantage of store loyalty savings programs, as well as clipping coupons and online discounts. Remember that stores retain your purchase habits. Make sure you are protecting your privacy and know your rights.
  • Only take advantage of the deal if you know you will eat the discounted item. It’s not a deal if the food goes to waste.
  • Shop the perimeter of the store for nutrient dense foods. Processed and packaged foods tend to be more expensive.
  • Visit your local farmer’s market to find fresh produce. Arrive early to get the best selection or late to get the best deals. Fresh food spoils quickly so don’t buy more than you can eat or freeze. Find your local farmers market.
  • Shop for foods that are in season. When the supply is plentiful, the prices tend to be lower.
  • Some stores offer discounts to customers for bringing their own bags.

For more grocery shopping tips visit eXtension.org and choosemyplate.gov.

The File Past Year Taxes

File past year taxes 7. File past year taxes   Costs You Can Deduct or Capitalize Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Carrying Charges Research and Experimental CostsProduct. File past year taxes Costs not included. File past year taxes Intangible Drilling Costs Exploration CostsPartnerships and S corporations. File past year taxes Development Costs Circulation Costs Business Start-Up and Organizational Costs Reforestation Costs Retired Asset Removal Costs Barrier Removal CostsOther barrier removals. File past year taxes Film and Television Production Costs What's New Film and television productions costs. File past year taxes  The election to expense film and television production costs does not apply to productions that begin after December 31, 2013. File past year taxes See Film and Television Production Costs , later. File past year taxes Introduction This chapter discusses costs you can elect to deduct or capitalize. File past year taxes You generally deduct a cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it. File past year taxes If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation. File past year taxes When you capitalize a cost, you add it to the basis of property to which it relates. File past year taxes A partnership, corporation, estate, or trust makes the election to deduct or capitalize the costs discussed in this chapter except for exploration costs for mineral deposits. File past year taxes Each individual partner, shareholder, or beneficiary elects whether to deduct or capitalize exploration costs. File past year taxes You may be subject to the alternative minimum tax (AMT) if you deduct research and experimental, intangible drilling, exploration, development, circulation, or business organizational costs. File past year taxes For more information on the alternative minimum tax, see the instructions for the following forms. File past year taxes Form 6251, Alternative Minimum Tax—Individuals. File past year taxes Form 4626, Alternative Minimum Tax—Corporations. File past year taxes Topics - This chapter discusses: Carrying charges Research and experimental costs Intangible drilling costs Exploration costs Development costs Circulation costs Qualified disaster expenses Business start-up and organizational costs Reforestation costs Retired asset removal costs Barrier removal costs Film and television production costs Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 3468 Investment Credit 8826 Disabled Access Credit See chapter 12 for information about getting publications and forms. File past year taxes Carrying Charges Carrying charges include the taxes and interest you pay to carry or develop real property or to carry, transport, or install personal property. File past year taxes Certain carrying charges must be capitalized under the uniform capitalization rules. File past year taxes (For information on capitalization of interest, see chapter 4 . File past year taxes ) You can elect to capitalize carrying charges not subject to the uniform capitalization rules, but only if they are otherwise deductible. File past year taxes You can elect to capitalize carrying charges separately for each project you have and for each type of carrying charge. File past year taxes For unimproved and unproductive real property, your election is good for only 1 year. File past year taxes You must decide whether to capitalize carrying charges each year the property remains unimproved and unproductive. File past year taxes For other real property, your election to capitalize carrying charges remains in effect until construction or development is completed. File past year taxes For personal property, your election is effective until the date you install or first use it, whichever is later. File past year taxes How to make the election. File past year taxes   To make the election to capitalize a carrying charge, attach a statement to your original tax return for the year the election is to be effective indicating which charges you are electing to capitalize. File past year taxes However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File past year taxes Attach the statement to the amended return and write “Filed pursuant to section 301. File past year taxes 9100-2” on the statement. File past year taxes File the amended return at the same address you filed the original return. File past year taxes Research and Experimental Costs The costs of research and experimentation are generally capital expenses. File past year taxes However, you can elect to deduct these costs as a current business expense. File past year taxes Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change. File past year taxes If you meet certain requirements, you may elect to defer and amortize research and experimental costs. File past year taxes For information on electing to defer and amortize these costs, see Research and Experimental Costs in chapter 8. File past year taxes Research and experimental costs defined. File past year taxes   Research and experimental costs are reasonable costs you incur in your trade or business for activities intended to provide information that would eliminate uncertainty about the development or improvement of a product. File past year taxes Uncertainty exists if the information available to you does not establish how to develop or improve a product or the appropriate design of a product. File past year taxes Whether costs qualify as research and experimental costs depends on the nature of the activity to which the costs relate rather than on the nature of the product or improvement being developed or the level of technological advancement. File past year taxes      The costs of obtaining a patent, including attorneys' fees paid or incurred in making and perfecting a patent application, are research and experimental costs. File past year taxes However, costs paid or incurred to obtain another's patent are not research and experimental costs. File past year taxes Product. File past year taxes   The term “product” includes any of the following items. File past year taxes Formula. File past year taxes Invention. File past year taxes Patent. File past year taxes Pilot model. File past year taxes Process. File past year taxes Technique. File past year taxes Property similar to the items listed above. File past year taxes It also includes products used by you in your trade or business or held for sale, lease, or license. File past year taxes Costs not included. File past year taxes   Research and experimental costs do not include expenses for any of the following activities. File past year taxes Advertising or promotions. File past year taxes Consumer surveys. File past year taxes Efficiency surveys. File past year taxes Management studies. File past year taxes Quality control testing. File past year taxes Research in connection with literary, historical, or similar projects. File past year taxes The acquisition of another's patent, model, production, or process. File past year taxes When and how to elect. File past year taxes   You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. File past year taxes If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS. File past year taxes Deducting or Amortizing Research and Experimentation Costs IF you . File past year taxes . File past year taxes . File past year taxes THEN . File past year taxes . File past year taxes . File past year taxes Elect to deduct research and experimental costs as a current business expense Deduct all research and experimental costs in the first year you pay or incur the costs and all later years. File past year taxes Do not deduct research and experimental costs as a current business expense If you meet the requirements, amortize them over at least 60 months, starting with the month you first receive an economic benefit from the research. File past year taxes See Research and Experimental Costs in chapter 8. File past year taxes Research credit. File past year taxes   If you pay or incur qualified research expenses, you may be able to take the research credit. File past year taxes For more information see Form 6765, Credit for Increasing Research Activities and its instructions. File past year taxes Intangible Drilling Costs The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. File past year taxes You can usually recover them through depreciation or depletion. File past year taxes However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense. File past year taxes These are certain drilling and development costs for wells in the United States in which you hold an operating or working interest. File past year taxes You can deduct only costs for drilling or preparing a well for the production of oil, gas, or geothermal steam or hot water. File past year taxes You can elect to deduct only the costs of items with no salvage value. File past year taxes These include wages, fuel, repairs, hauling, and supplies related to drilling wells and preparing them for production. File past year taxes Your cost for any drilling or development work done by contractors under any form of contract is also an IDC. File past year taxes However, see Amounts paid to contractor that must be capitalized , later. File past year taxes You can also elect to deduct the cost of drilling exploratory bore holes to determine the location and delineation of offshore hydrocarbon deposits if the shaft is capable of conducting hydrocarbons to the surface on completion. File past year taxes It does not matter whether there is any intent to produce hydrocarbons. File past year taxes If you do not elect to deduct your IDCs as a current business expense, you can elect to deduct them over the 60-month period beginning with the month they were paid or incurred. File past year taxes Amounts paid to contractor that must be capitalized. File past year taxes   Amounts paid to a contractor must be capitalized if they are either: Amounts properly allocable to the cost of depreciable property, or Amounts paid only out of production or proceeds from production if these amounts are depletable income to the recipient. File past year taxes How to make the election. File past year taxes   You elect to deduct IDCs as a current business expense by taking the deduction on your income tax return for the first tax year you have eligible costs. File past year taxes No formal statement is required. File past year taxes If you file Schedule C (Form 1040), enter these costs under “Other expenses. File past year taxes ”   For oil and gas wells, your election is binding for the year it is made and for all later years. File past year taxes For geothermal wells, your election can be revoked by the filing of an amended return on which you do not take the deduction. File past year taxes You can file the amended return for the year up to the normal time of expiration for filing a claim for credit or refund, generally, within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later. File past year taxes Energy credit for costs of geothermal wells. File past year taxes   If you capitalize the drilling and development costs of geothermal wells that you place in service during the tax year, you may be able to claim a business energy credit. File past year taxes See the Instructions for Form 3468 for more information. File past year taxes Nonproductive well. File past year taxes   If you capitalize your IDCs, you have another option if the well is nonproductive. File past year taxes You can deduct the IDCs of the nonproductive well as an ordinary loss. File past year taxes You must indicate and clearly state your election on your tax return for the year the well is completed. File past year taxes Once made, the election for oil and gas wells is binding for all later years. File past year taxes You can revoke your election for a geothermal well by filing an amended return that does not claim the loss. File past year taxes Costs incurred outside the United States. File past year taxes   You cannot deduct as a current business expense all the IDCs paid or incurred for an oil, gas, or geothermal well located outside the United States. File past year taxes However, you can elect to include the costs in the adjusted basis of the well to figure depletion or depreciation. File past year taxes If you do not make this election, you can deduct the costs over the 10-year period beginning with the tax year in which you paid or incurred them. File past year taxes These rules do not apply to a nonproductive well. File past year taxes Exploration Costs The costs of determining the existence, location, extent, or quality of any mineral deposit are ordinarily capital expenditures if the costs lead to the development of a mine. File past year taxes You recover these costs through depletion as the mineral is removed from the ground. File past year taxes However, you can elect to deduct domestic exploration costs paid or incurred before the beginning of the development stage of the mine (except those for oil and gas wells). File past year taxes How to make the election. File past year taxes   You elect to deduct exploration costs by taking the deduction on your income tax return, or on an amended income tax return, for the first tax year for which you wish to deduct the costs paid or incurred during the tax year. File past year taxes Your return must adequately describe and identify each property or mine, and clearly state how much is being deducted for each one. File past year taxes The election applies to the tax year you make this election and all later tax years. File past year taxes Partnerships and S corporations. File past year taxes   Each partner, not the partnership, elects whether to capitalize or to deduct that partner's share of exploration costs. File past year taxes Each shareholder, not the S corporation, elects whether to capitalize or to deduct that shareholder's share of exploration costs. File past year taxes Reduced corporate deductions for exploration costs. File past year taxes   A corporation (other than an S corporation) can deduct only 70% of its domestic exploration costs. File past year taxes It must capitalize the remaining 30% of costs and amortize them over the 60-month period starting with the month the exploration costs are paid or incurred. File past year taxes A corporation may also elect to capitalize and amortize mining exploration costs over a 10-year period. File past year taxes For more information on this method of amortization, see Internal Revenue Code section 59(e). File past year taxes   The 30% the corporation capitalizes cannot be added to its basis in the property to figure cost depletion. File past year taxes However, the amount amortized is treated as additional depreciation and is subject to recapture as ordinary income on a disposition of the property. File past year taxes See Section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. File past year taxes   These rules also apply to the deduction of development costs by corporations. File past year taxes See Development Costs , later. File past year taxes Recapture of exploration expenses. File past year taxes   When your mine reaches the producing stage, you must recapture any exploration costs you elected to deduct. File past year taxes Use either of the following methods. File past year taxes Method 1—Include the deducted costs in gross income for the tax year the mine reaches the producing stage. File past year taxes Your election must be clearly indicated on the return. File past year taxes Increase your adjusted basis in the mine by the amount included in income. File past year taxes Generally, you must elect this recapture method by the due date (including extensions) of your return. File past year taxes However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File past year taxes Make the election on your amended return and write “Filed pursuant to section 301. File past year taxes 9100-2” on the form where you are including the income. File past year taxes File the amended return at the same address you filed the original return. File past year taxes Method 2—Do not claim any depletion deduction for the tax year the mine reaches the producing stage and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. File past year taxes   You also must recapture deducted exploration costs if you receive a bonus or royalty from mine property before it reaches the producing stage. File past year taxes Do not claim any depletion deduction for the tax year you receive the bonus or royalty and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. File past year taxes   Generally, if you dispose of the mine before you have fully recaptured the exploration costs you deducted, recapture the balance by treating all or part of your gain as ordinary income. File past year taxes Under these circumstances, you generally treat as ordinary income all of your gain if it is less than your adjusted exploration costs with respect to the mine. File past year taxes If your gain is more than your adjusted exploration costs, treat as ordinary income only a part of your gain, up to the amount of your adjusted exploration costs. File past year taxes Foreign exploration costs. File past year taxes   If you pay or incur exploration costs for a mine or other natural deposit located outside the United States, you cannot deduct all the costs in the current year. File past year taxes You can elect to include the costs (other than for an oil, gas, or geothermal well) in the adjusted basis of the mineral property to figure cost depletion. File past year taxes (Cost depletion is discussed in chapter 9 . File past year taxes ) If you do not make this election, you must deduct the costs over the 10-year period beginning with the tax year in which you pay or incur them. File past year taxes These rules also apply to foreign development costs. File past year taxes Development Costs You can deduct costs paid or incurred during the tax year for developing a mine or any other natural deposit (other than an oil or gas well) located in the United States. File past year taxes These costs must be paid or incurred after the discovery of ores or minerals in commercially marketable quantities. File past year taxes Development costs also include depreciation on improvements used in the development of ores or minerals and costs incurred for you by a contractor. File past year taxes Development costs do not include the costs for the acquisition or improvement of depreciable property. File past year taxes Instead of deducting development costs in the year paid or incurred, you can elect to treat the cost as deferred expenses and deduct them ratably as the units of produced ores or minerals benefited by the expenses are sold. File past year taxes This election applies each tax year to expenses paid or incurred in that year. File past year taxes Once made, the election is binding for the year and cannot be revoked for any reason. File past year taxes How to make the election. File past year taxes   The election to deduct development costs ratably as the ores or minerals are sold must be made for each mine or other natural deposit by a clear indication on your return or by a statement filed with the IRS office where you file your return. File past year taxes Generally, you must make the election by the due date of the return (including extensions). File past year taxes However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File past year taxes Clearly indicate the election on your amended return and write “Filed pursuant to section 301. File past year taxes 9100-2. File past year taxes ” File the amended return at the same address you filed the original return. File past year taxes Foreign development costs. File past year taxes   The rules discussed earlier for foreign exploration costs apply to foreign development costs. File past year taxes Reduced corporate deductions for development costs. File past year taxes   The rules discussed earlier for reduced corporate deductions for exploration costs also apply to corporate deductions for development costs. File past year taxes Circulation Costs A publisher can deduct as a current business expense the costs of establishing, maintaining, or increasing the circulation of a newspaper, magazine, or other periodical. File past year taxes For example, a publisher can deduct the cost of hiring extra employees for a limited time to get new subscriptions through telephone calls. File past year taxes Circulation costs are deductible even if they normally would be capitalized. File past year taxes This rule does not apply to the following costs that must be capitalized. File past year taxes The purchase of land or depreciable property. File past year taxes The acquisition of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical, including the purchase of another publisher's list of subscribers. File past year taxes Other treatment of circulation costs. File past year taxes   If you do not want to deduct circulation costs as a current business expense, you can elect one of the following ways to recover these costs. File past year taxes Capitalize all circulation costs that are properly chargeable to a capital account (see chapter 1 ). File past year taxes Amortize circulation costs over the 3-year period beginning with the tax year they were paid or incurred. File past year taxes How to make the election. File past year taxes   You elect to capitalize circulation costs by attaching a statement to your return for the first tax year the election applies. File past year taxes Your election is binding for the year it is made and for all later years, unless you get IRS approval to revoke it. File past year taxes Business Start-Up and Organizational Costs Business start-up and organizational costs are generally capital expenditures. File past year taxes However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. File past year taxes The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. File past year taxes Any remaining costs must be amortized. File past year taxes For information about amortizing start-up and organizational costs, see chapter 8 . File past year taxes Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. File past year taxes Organizational costs include the costs of creating a corporation. File past year taxes For more information on start-up and organizational costs, see chapter 8 . File past year taxes How to make the election. File past year taxes   You elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return (filed by the due date including extensions) for the tax year in which the active trade or business begins. File past year taxes However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File past year taxes Clearly indicate the election on your amended return and write “Filed pursuant to section 301. File past year taxes 9100-2. File past year taxes ” File the amended return at the same address you filed the original return. File past year taxes The election applies when computing taxable income for the current tax year and all subsequent years. File past year taxes Reforestation Costs Reforestation costs are generally capital expenditures. File past year taxes However, you can elect to deduct up to $10,000 ($5,000 if married filing separately; $0 for a trust) of qualifying reforestation costs paid or incurred after October 22, 2004, for each qualified timber property. File past year taxes The remaining costs can be amortized over an 84-month period. File past year taxes For information about amortizing reforestation costs, see chapter 8 . File past year taxes Qualifying reforestation costs are the direct costs of planting or seeding for forestation or reforestation. File past year taxes Qualified timber property is property that contains trees in significant commercial quantities. File past year taxes See chapter 8 for more information on qualifying reforestation costs and qualified timber property. File past year taxes If you elect to deduct qualified reforestation costs, create and maintain separate timber accounts for each qualified timber property and include all reforestation costs and the dates each was applied. File past year taxes Do not include this qualified timber property in any account (for example, depletion block) for which depletion is allowed. File past year taxes How to make the election. File past year taxes   You elect to deduct qualifying reforestation costs by claiming the deduction on your timely filed income tax return (including extensions) for the tax year the expenses were paid or incurred. File past year taxes If Form T (Timber), Forest Activities Schedule, is required, complete Part IV of Form T. File past year taxes If Form T is not required, attach a statement containing the following information for each qualified timber property for which an election is being made. File past year taxes The unique stand identification numbers. File past year taxes The total number of acres reforested during the tax year. File past year taxes The nature of the reforestation treatments. File past year taxes The total amounts of qualified reforestation expenditures eligible to be amortized or deducted. File past year taxes   If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File past year taxes Clearly indicate the election on your amended return and write “Filed pursuant to section 301. File past year taxes 9100-2. File past year taxes ” File the amended return at the same address you filed the original return. File past year taxes The election applies when computing taxable income for the current tax year and all subsequent years. File past year taxes   For additional information on reforestation costs, see chapter 8 . File past year taxes Recapture. File past year taxes   This deduction may have to be recaptured as ordinary income under section 1245 when you sell or otherwise dispose of the property that would have received an addition to basis if you had not elected to deduct the expenditure. File past year taxes For more information on recapturing the deduction, see Depreciation Recapture in Publication 544. File past year taxes Retired Asset Removal Costs If you retire and remove a depreciable asset in connection with the installation or production of a replacement asset, you can deduct the costs of removing the retired asset. File past year taxes However, if you replace a component (part) of a depreciable asset, capitalize the removal costs if the replacement is an improvement and deduct the costs if the replacement is a repair. File past year taxes Barrier Removal Costs The cost of an improvement to a business asset is normally a capital expense. File past year taxes However, you can elect to deduct the costs of making a facility or public transportation vehicle more accessible to and usable by those who are disabled or elderly. File past year taxes You must own or lease the facility or vehicle for use in connection with your trade or business. File past year taxes A facility is all or any part of buildings, structures, equipment, roads, walks, parking lots, or similar real or personal property. File past year taxes A public transportation vehicle is a vehicle, such as a bus or railroad car, that provides transportation service to the public (including service for your customers, even if you are not in the business of providing transportation services). File past year taxes You cannot deduct any costs that you paid or incurred to completely renovate or build a facility or public transportation vehicle or to replace depreciable property in the normal course of business. File past year taxes Deduction limit. File past year taxes   The most you can deduct as a cost of removing barriers to the disabled and the elderly for any tax year is $15,000. File past year taxes However, you can add any costs over this limit to the basis of the property and depreciate these excess costs. File past year taxes Partners and partnerships. File past year taxes   The $15,000 limit applies to a partnership and also to each partner in the partnership. File past year taxes A partner can allocate the $15,000 limit in any manner among the partner's individually incurred costs and the partner's distributive share of partnership costs. File past year taxes If the partner cannot deduct the entire share of partnership costs, the partnership can add any costs not deducted to the basis of the improved property. File past year taxes   A partnership must be able to show that any amount added to basis was not deducted by the partner and that it was over a partner's $15,000 limit (as determined by the partner). File past year taxes If the partnership cannot show this, it is presumed that the partner was able to deduct the distributive share of the partnership's costs in full. File past year taxes Example. File past year taxes Emilio Azul's distributive share of ABC partnership's deductible expenses for the removal of architectural barriers was $14,000. File past year taxes Emilio had $12,000 of similar expenses in his sole proprietorship. File past year taxes He elected to deduct $7,000 of them. File past year taxes Emilio allocated the remaining $8,000 of the $15,000 limit to his share of ABC's expenses. File past year taxes Emilio can add the excess $5,000 of his own expenses to the basis of the property used in his business. File past year taxes Also, if ABC can show that Emilio could not deduct $6,000 ($14,000 – $8,000) of his share of the partnership's expenses because of how Emilio applied the limit, ABC can add $6,000 to the basis of its property. File past year taxes Qualification standards. File past year taxes   You can deduct your costs as a current expense only if the barrier removal meets the guidelines and requirements issued by the Architectural and Transportation Barriers Compliance Board under the Americans with Disabilities Act (ADA) of 1990. File past year taxes You can view the Americans with Disabilities Act at www. File past year taxes ada. File past year taxes gov/pubs/ada. File past year taxes htm. File past year taxes   The following is a list of some architectural barrier removal costs that can be deducted. File past year taxes Ground and floor surfaces. File past year taxes Walks. File past year taxes Parking lots. File past year taxes Ramps. File past year taxes Entrances. File past year taxes Doors and doorways. File past year taxes Stairs. File past year taxes Floors. File past year taxes Toilet rooms. File past year taxes Water fountains. File past year taxes Public telephones. File past year taxes Elevators. File past year taxes Controls. File past year taxes Signage. File past year taxes Alarms. File past year taxes Protruding objects. File past year taxes Symbols of accessibility. File past year taxes You can find the ADA guidelines and requirements for architectural barrier removal at www. File past year taxes usdoj. File past year taxes gov/crt/ada/reg3a. File past year taxes html. File past year taxes   The costs for removal of transportation barriers from rail facilities, buses, and rapid and light rail vehicles are deductible. File past year taxes You can find the guidelines and requirements for transportation barrier removal at www. File past year taxes fta. File past year taxes dot. File past year taxes gov. File past year taxes   Also, you can access the ADA website at www. File past year taxes ada. File past year taxes gov for additional information. File past year taxes Other barrier removals. File past year taxes   To be deductible, expenses of removing any barrier not covered by the above standards must meet all three of the following tests. File past year taxes The removed barrier must be a substantial barrier to access or use of a facility or public transportation vehicle by persons who have a disability or are elderly. File past year taxes The removed barrier must have been a barrier for at least one major group of persons who have a disability or are elderly (such as people who are blind, deaf, or wheelchair users). File past year taxes The barrier must be removed without creating any new barrier that significantly impairs access to or use of the facility or vehicle by a major group of persons who have a disability or are elderly. File past year taxes How to make the election. File past year taxes   If you elect to deduct your costs for removing barriers to the disabled or the elderly, claim the deduction on your income tax return (partnership return for partnerships) for the tax year the expenses were paid or incurred. File past year taxes Identify the deduction as a separate item. File past year taxes The election applies to all the qualifying costs you have during the year, up to the $15,000 limit. File past year taxes If you make this election, you must maintain adequate records to support your deduction. File past year taxes   For your election to be valid, you generally must file your return by its due date, including extensions. File past year taxes However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). File past year taxes Clearly indicate the election on your amended return and write “Filed pursuant to section 301. File past year taxes 9100-2. File past year taxes ” File the amended return at the same address you filed the original return. File past year taxes Your election is irrevocable after the due date, including extensions, of your return. File past year taxes Disabled access credit. File past year taxes   If you make your business accessible to persons with disabilities and your business is an eligible small business, you may be able to claim the disabled access credit. File past year taxes If you choose to claim the credit, you must reduce the amount you deduct or capitalize by the amount of the credit. File past year taxes   For more information, see Form 8826, Disabled Access Credit. File past year taxes Film and Television Production Costs Film and television production costs are generally capital expenses. File past year taxes However, you can elect to deduct costs paid or incurred for certain productions commencing before January 1, 2014. File past year taxes For more information, see section 181 of the Internal Revenue Code and the related Treasury Regulations. File past year taxes Prev  Up  Next   Home   More Online Publications