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What is form 8615 and what is considered unearned income? Do I need to have my parents fill this out/it is asking me for their information?

Forum|Forum|7 years ago
June 3, 2019
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I am a college student who has received scholarships, is this considered unearned income or ? I am not sure how to fill out this section.

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Best answer by macuser_22

The 8615 can be required whether you are claimed or not.

See IRS Pub 17:

https://www.irs.gov/publications/p17/ch31.html#en_US_2016_publink1000174280
Tax for Certain Children Who Have Unearned Income

If a child's interest, dividends, and other unearned income total more than $2,100, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. If the parent doesn't or can't choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. Attach the completed form to the child's Form 1040 or Form 1040A.

Form 8615 must be filed for a child if all of the following statements are true.

1) The child's unearned income was more than $2,100.

2) The child is required to file a return for 2016.

3) The child either:

a) Was under age 18 at the end of the year,
b) Was age 18 at the end of the year and didn't have earned income that was more than half of his or her support, or
c) Was a full-time student at least age 19 and under age 24 at the end of 2016 and didn't have earned income that was more than half of the child's support.

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

5) The child doesn't file a joint return for 2016.

================

From IRS Pub 17

Earned income. Earned income includes salaries, wages, tips, and other payments received for personal services performed. It doesn't include unearned income as defined next.

Unearned income defined. Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually done. It includes taxable interest, dividends (including capital gain distributions), capital gains, unemployment compensation, taxable scholarship and fellowship grants not reported on Form W-2, the taxable part of social security and pension payments, and certain distributions from trusts. 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).

macuser_22Answer

Employee

The 8615 can be required whether you are claimed or not.

See IRS Pub 17:

https://www.irs.gov/publications/p17/ch31.html#en_US_2016_publink1000174280
Tax for Certain Children Who Have Unearned Income

If a child's interest, dividends, and other unearned income total more than $2,100, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. If the parent doesn't or can't choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax. Attach the completed form to the child's Form 1040 or Form 1040A.

Form 8615 must be filed for a child if all of the following statements are true.

1) The child's unearned income was more than $2,100.

2) The child is required to file a return for 2016.

3) The child either:

a) Was under age 18 at the end of the year,
b) Was age 18 at the end of the year and didn't have earned income that was more than half of his or her support, or
c) Was a full-time student at least age 19 and under age 24 at the end of 2016 and didn't have earned income that was more than half of the child's support.

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

5) The child doesn't file a joint return for 2016.

================

From IRS Pub 17

Earned income. Earned income includes salaries, wages, tips, and other payments received for personal services performed. It doesn't include unearned income as defined next.

Unearned income defined. Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually done. It includes taxable interest, dividends (including capital gain distributions), capital gains, unemployment compensation, taxable scholarship and fellowship grants not reported on Form W-2, the taxable part of social security and pension payments, and certain distributions from trusts. 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).

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

A

anonuser

The question was asked in June 2019. The "answer" states:

2) The child is required to file a return for 2016.

why 2016?

macuser_22

Employee

@anonuser wrote:

The question was asked in June 2019. The "answer" states:

2) The child is required to file a return for 2016.

why 2016?

Because the question and post is many years old. June, 2019 was the date that old archived posts were "migrated" form the old TurboTax "Answer Exchange" to this new "Community" forum, but migrated posts took on the date of migration as the posting date. (Any post with a date of June 2019 is probably 2-6 years old but the content of the post sometimes reveals the true date as it does in this post since it refers to 2016).

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

P

Photium

So I'm being asked to enter my parent's SSN on a Form 8615. Looking at the above answer, it seems to be because of this "If a child's interest, dividends, and other unearned income total more than $2,100, part of that income may be taxed at the parent's tax rate instead of the child's tax rate. If the parent doesn't or can't choose to include the child's income on the parent's return, use Form 8615 to figure the child's tax."? The unearned income I had that was more than $2,100 was from the taxable(room/board) part of scholarship/grants.

Above it also says "Form 8615 must be filed for a child if all of the following statements are true". I have to questions in regards to this. For number 2, it says "The child is required to file a return for 2016." This is probably 2020 since that is the year we are currently filing for. However, I am not sure if I am "required" to file a return. My income was about $4,240 which includes the taxable scholarship/grants. Do I have to include the nontaxable grants that was used to pay for my tuition as part of my income? Right now that amount doesn't include it. For number 3 part c: "and didn't have earned income that was more than half of the child's support" If I consider tuition to not be an expense I made since my grants covered it and my bank account was not charged for it and also did not include that said grant as part of my income then I would have earned income that was more than half of my support (would have supported myself). Is that a way I could look at it or not?

For reference, my parent cannot claim me as a dependent since I only received $1,500 cash from them. Speaking of which, do I need to report that as my income as well? I know it won't be taxed since it is not $15,000 or greater but do I still need to include that as my income? I don't think it would change anything above.

J

jcderry

Follow-up question on what is considered unearned income?

I got a sizeable amount of scholarships last year that are all written on my 1098-T. However, the amount in Box 5 is much larger than the amount in Box 1 which makes me believe that TT thinks this was unearned income. All the difference went to pay for off-campus housing but I have not submitted leases or anything on my form other than input the total amount of the lease. Is there any chance this is the reason I have been asked to complete this?

Also, I have seen on another post that if I claim that I supported more than half of my living expenses last year, then it will go away. If scholarships and grants are included in earned income that I used to support myself, then yes, this year I supported more than half of my income, but I don't know if this is included because my taxes are depicted in my 1098-T, not my W-2.

macuser_22

Employee

@jcderry wrote:

Follow-up question on what is considered unearned income?

I got a sizeable amount of scholarships last year that are all written on my 1098-T. However, the amount in Box 5 is much larger than the amount in Box 1 which makes me believe that TT thinks this was unearned income. All the difference went to pay for off-campus housing but I have not submitted leases or anything on my form other than input the total amount of the lease. Is there any chance this is the reason I have been asked to complete this?

Also, I have seen on another post that if I claim that I supported more than half of my living expenses last year, then it will go away. If scholarships and grants are included in earned income that I used to support myself, then yes, this year I supported more than half of my income, but I don't know if this is included because my taxes are depicted in my 1098-T, not my W-2.

Sorry but scholarships do not count as you own support. It is support provided by others.

Reference: https://www.irs.gov/pub/irs-pdf/p501.pdf page 15.

Also see worksheet 2 (page 16) for determining support.

[Quot]

Scholarships.

A scholarship received by a
child who is a student isn't taken into account in
determining whether the child provided more
than half of his or her own support.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**