Federal Review tab for children with unearned income. Last year I filed as an independent and was not required to fill out this information

If you have the amount of income that triggers the form, you can't avoid it.

Living arrangements are considered for this form. The idea behind it is to prevent parents from putting their investments in a child's name to have it be taxed at a lower rate. Below is a complete explanation of the Form and there is a link at the end. If you feel this is incorrect, review your return to make sure you don't have unearned income.

Purpose of Form

 For children under age 18 and certain older children described below in Who Must File, unearned income over $2,100 is taxed at the parent's rate if the parent's rate is higher than the child's. If the child's unearned income is more than $2,100, use Form 8615 to figure the child's tax.

 Unearned Income 

For Form 8615, “unearned income” includes all taxable income other than earned income as defined later. Unearned income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, etc. It also includes taxable social security benefits, pension and annuity income, taxable scholarship and fellowship grants not reported on Form W-2, unemployment compensation, alimony, and income (other than earned income) received as the beneficiary of a trust. 

Who Must File

 Form 8615 must be filed for any child who meets all of the following conditions.

 1. The child had more than $2,100 of unearned income.

 2. The child is required to file a tax return.

 3. The child either: a. Was under age 18 at the end of 2016, b. Was age 18 at the end of 2016 and did not have earned income that was more than half of the child's support, or c. Was a full-time student at least age 19 and under age 24 at the end of 2016 and did not have earned income that was more than half of the child's support(Earned income is defined later. Support is defined below.)

 4. At least one of the child's parents was alive at the end of 2016.

 5. The child does not file a joint return for 2016. For these rules, the term “child” includes a legally adopted child and a stepchild. These rules apply whether or not the child is a dependent. These rules do not apply if neither of the child’s parents were living at the end of the year.

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Unearned Income Definition

Unearned income. Income other than earned income. This is investment-type income and includes interest, dividends, and capital gains (including capital gain distributions), rents, royalties, etc. Distributions of interest, dividends, capital gains, and other unearned income from a trust are also unearned income to a beneficiary of the trust. However, for purposes of completing Form 8615, a taxable distribution from a qualified disability trust is considered earned income.