IRS Instruction 8615 – IRS Forms, Instructions, Pubs 2026 – In the world of taxation, special rules apply to minors and young adults with investment income. IRS Form 8615, often associated with the “kiddie tax,” ensures that unearned income for qualifying children is taxed appropriately—potentially at their parents’ higher tax rate. This prevents tax avoidance strategies where parents shift income to children in lower brackets. If you’re a parent, guardian, or young taxpayer navigating these rules for the 2025 tax year, this comprehensive guide breaks down the instructions, filing requirements, and key calculations.
What Is IRS Form 8615 and the Kiddie Tax?
Form 8615 is used to calculate the tax on a child’s unearned income that exceeds $2,700 for the 2025 tax year. The kiddie tax rule taxes this excess at the parent’s tax rate if it’s higher than the child’s, aiming to close loopholes in family tax planning. Unearned income includes things like interest, dividends, and capital gains, while earned income (like wages from a job) is taxed at the child’s rate.
This form must be attached to the child’s individual tax return (Form 1040 or 1040-NR) if certain conditions are met. Parents may sometimes avoid this by electing to report the income on their own return using Form 8814, but that could result in higher overall taxes.
Who Must File Form 8615?
Not every child with income needs to file this form. Here’s a breakdown of the criteria for the 2025 tax year:
- The child must have more than $2,700 in unearned income.
- The child is required to file a tax return (generally if gross income exceeds the standard deduction).
- Age requirements: The child was under 18 at the end of 2025, or age 18 but with earned income not exceeding half of their support, or a full-time student aged 19-23 with earned income not exceeding half of their support.
- At least one parent was alive at the end of 2025.
- The child does not file a joint tax return.
“Child” includes biological, adopted, and stepchildren, even if not claimed as a dependent. Support encompasses expenses for food, housing, education, medical care, and more—scholarships for full-time students don’t count. Special rules apply for children born on January 1; for example, a child born January 1, 2008, is considered 18 at year-end.
If neither parent is alive or the unearned income is $2,700 or less, Form 8615 isn’t required. Always check if the child qualifies for the Alternative Minimum Tax (Form 6251) or Net Investment Income Tax (Form 8960) alongside this.
Key Definitions: Unearned Income vs. Earned Income
Understanding the difference is crucial for accurate filing:
- Unearned Income: All income not from work, such as taxable interest, dividends, capital gains (including distributions), rents, royalties, pensions, annuities, taxable scholarships, unemployment benefits, alimony, and taxable Social Security or pension payments. It also includes income from trusts (except earned portions). Capital losses can offset gains, with up to $3,000 excess deductible against other unearned income.
- Earned Income: Salaries, wages, tips, or self-employment income from personal services. For businesses, it may include up to 30% of net profits if capital isn’t a major factor. Distributions from qualified disability trusts count as earned.
Income from gifted property counts as unearned if generated by the asset itself. Tax-exempt interest and nontaxable Social Security portions are excluded.
Step-by-Step: How to Complete Form 8615?
Filling out Form 8615 involves referencing the parent’s tax information. Use the parent’s return based on filing status—joint for married couples, or the one with higher taxable income if separate. For divorced parents, it’s typically the custodial parent (or their new spouse if remarried and filing jointly).
Here’s a line-by-line overview:
- Lines A-C: Enter the parent’s name, SSN, and filing status.
- Line 1: Calculate the child’s unearned income (AGI from Form 1040 minus earned income). Use the Child’s Unearned Income Worksheet or Alternate Worksheet for adjustments like foreign income or losses.
- Line 2: Enter $2,700, or higher if itemizing deductions directly connected to the income (e.g., investment fees; note miscellaneous deductions are suspended through 2025).
- Line 3: Subtract Line 2 from Line 1 (if zero or negative, attach the form but proceed with normal tax calculation).
- Line 4: Child’s taxable income from Form 1040.
- Line 5: The smaller of Line 3 or Line 4 (net unearned income).
- Lines 6-8: Add parent’s taxable income and net unearned income from other qualifying children; allocate capital gains and qualified dividends proportionally.
- Line 9: Compute tax on Line 8 using the parent’s rate (Tax Table, Qualified Dividends and Capital Gain Tax Worksheet, or Schedule D Tax Worksheet).
- Lines 10-13: Subtract parent’s tax to get tentative tax; prorate if multiple children.
- Lines 14-18: Calculate tax on remaining income at child’s rate; take the higher of this combined amount or the child’s full tax, and enter on the child’s Form 1040.
Worksheets are essential for allocations, especially for capital gains or qualified dividends. If the parent’s info is unavailable, request an extension or IRS assistance with proof of eligibility.
Exceptions, Elections, and Special Situations
- Form 8814 Election: Parents can report the child’s interest, dividends, and capital gains (under $13,500 total) on their return, skipping Form 8615. This simplifies filing but may increase taxes.
- Divorced or Remarried Parents: Use the custodial parent’s return; if remarried, the new spouse counts as the other parent.
- Amended Returns: File Form 1040-X if parent’s income changes or other children’s income affects calculations.
- Foreign or Different Tax Years: Adjust using the parent’s return ending in the child’s tax year.
If the child has no net unearned income after deductions, simply attach the form without further changes.
Recent Changes and Updates for 2025
The 2025 instructions reflect ongoing suspensions of miscellaneous itemized deductions (extended beyond 2018-2025 in prior rules), but unreimbursed educator expenses remain deductible. Thresholds remain at $2,700 for unearned income, with no major structural changes noted. Always check for post-publication updates on IRS.gov, as legislation could impact rules.
Where to Download IRS Instructions for Form 8615?
For the official 2025 instructions, download the PDF directly from the IRS website: https://www.irs.gov/pub/irs-pdf/i8615.pdf. This document includes all worksheets and detailed examples.
Navigating the kiddie tax can be complex, but following these instructions ensures compliance and avoids penalties. Consult a tax professional for personalized advice, especially with investments or family trusts. By understanding Form 8615, you can better manage family finances and minimize tax burdens for the 2025 tax season.