The tax season can be a daunting time for many individuals and families, especially when it comes to navigating complex tax forms and regulations. One such form that may cause confusion is Form 8615, also known as the "Dependency Exemption for Qualifying Child." In this article, we will delve into the world of tax preparation and explore three reasons why TurboTax, a popular tax preparation software, may ask for Form 8615.
Reason 1: Qualifying Child Dependency Exemption
TurboTax may ask for Form 8615 if you are claiming a qualifying child as a dependent on your tax return. The form is used to report the dependency exemption for a qualifying child, which can provide significant tax savings. To qualify for this exemption, the child must meet certain requirements, such as being under the age of 19 (or 24 if a full-time student) and having lived with you for more than six months of the tax year.
When you claim a qualifying child as a dependent, you may be eligible for a dependency exemption, which can reduce your taxable income. However, to qualify for this exemption, you must complete and attach Form 8615 to your tax return. TurboTax will guide you through the process of completing the form and ensure that you are eligible for the exemption.
Who Qualifies as a Qualifying Child?
To qualify as a qualifying child, the individual must meet the following requirements:
- Be under the age of 19 (or 24 if a full-time student)
- Be your son, daughter, stepson, stepdaughter, brother, sister, or a descendant of any of these individuals
- Have lived with you for more than six months of the tax year
- Not have filed a joint tax return for the tax year (unless it's only to claim a refund)
- Not have paid more than half of their own support for the tax year
If you have a qualifying child, TurboTax will ask for Form 8615 to ensure that you are eligible for the dependency exemption.
Reason 2: Multiple Support Agreements
TurboTax may also ask for Form 8615 if you have a multiple support agreement in place. A multiple support agreement is an agreement between two or more individuals who provide support for a qualifying child. This agreement is typically used when the child's parents are divorced or separated and both parents provide financial support.
When you have a multiple support agreement, you must complete Form 8615 to report the agreement and allocate the dependency exemption among the parties involved. TurboTax will guide you through the process of completing the form and ensure that you are in compliance with the IRS regulations.
How Multiple Support Agreements Work
A multiple support agreement is typically used when two or more individuals provide financial support for a qualifying child. The agreement must be in writing and signed by all parties involved. The agreement should include the following information:
- The names and Social Security numbers of all parties involved
- The name and Social Security number of the qualifying child
- The amount of support provided by each party
- The percentage of support provided by each party
When you have a multiple support agreement, you must complete Form 8615 to report the agreement and allocate the dependency exemption among the parties involved.
Reason 3: Kiddie Tax
Finally, TurboTax may ask for Form 8615 if you are subject to the "kiddie tax." The kiddie tax is a tax on the unearned income of certain children. The tax is designed to prevent parents from shifting income to their children to avoid paying taxes.
When a child has unearned income, such as interest, dividends, or capital gains, they may be subject to the kiddie tax. The kiddie tax is calculated using the parent's tax rate, rather than the child's tax rate. TurboTax will ask for Form 8615 to report the child's unearned income and calculate the kiddie tax.
How the Kiddie Tax Works
The kiddie tax is calculated using the parent's tax rate, rather than the child's tax rate. The tax is applied to the child's unearned income, which includes:
- Interest income
- Dividend income
- Capital gains
- Other types of unearned income
When a child is subject to the kiddie tax, the parent must complete Form 8615 to report the child's unearned income and calculate the tax.
In conclusion, TurboTax may ask for Form 8615 for several reasons, including qualifying child dependency exemptions, multiple support agreements, and the kiddie tax. By completing Form 8615, you can ensure that you are in compliance with the IRS regulations and taking advantage of the tax savings available to you.
We hope this article has been informative and helpful in understanding the reasons why TurboTax may ask for Form 8615. If you have any questions or comments, please feel free to share them below.
What is Form 8615 used for?
+Form 8615 is used to report the dependency exemption for a qualifying child, multiple support agreements, and the kiddie tax.
Who qualifies as a qualifying child?
+A qualifying child is an individual who meets certain requirements, such as being under the age of 19 (or 24 if a full-time student) and having lived with you for more than six months of the tax year.
What is the kiddie tax?
+The kiddie tax is a tax on the unearned income of certain children. The tax is designed to prevent parents from shifting income to their children to avoid paying taxes.