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File 2009 taxes 3. File 2009 taxes   Claiming the Special Depreciation Allowance Table of Contents Introduction What Is Qualified Property?Qualified Reuse and Recycling Property Qualified Cellulosic Biofuel Plant Property Qualified Disaster Assistance Property Certain Qualified Property Acquired After December 31, 2007 Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance How Much Can You Deduct? How Can You Elect Not To Claim an Allowance? When Must You Recapture an Allowance? Introduction You can take a special depreciation allowance to recover part of the cost of qualified property (defined next), placed in service during the tax year. File 2009 taxes The allowance applies only for the first year you place the property in service. File 2009 taxes For qualified property placed in service in 2013, you can take an additional 50% special allowance. File 2009 taxes The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service. File 2009 taxes This chapter explains what is qualified property. File 2009 taxes It also includes rules regarding how to figure an allowance, how to elect not to claim an allowance, and when you must recapture an allowance. File 2009 taxes Corporations can elect to accelerate certain minimum tax credits in lieu of claiming the special depreciation allowance for eligible qualified property. File 2009 taxes See Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance , later. File 2009 taxes See chapter 6 for information about getting publications and forms. File 2009 taxes What Is Qualified Property? Your property is qualified property if it is one of the following. File 2009 taxes Qualified reuse and recycling property. File 2009 taxes Qualified cellulosic biofuel plant property. File 2009 taxes Qualified disaster assistance property. File 2009 taxes Certain qualified property acquired after December 31, 2007. File 2009 taxes The following discussions provide information about the types of qualified property listed above for which you can take the special depreciation allowance. File 2009 taxes Qualified Reuse and Recycling Property You can take a 50% special depreciation allowance for qualified reuse and recycling property. File 2009 taxes Qualified reuse and recycling property is any machinery or equipment (not including buildings or real estate), along with any appurtenance, that is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials (as defined in section 168(m)(3)(B) of the Internal Revenue Code). File 2009 taxes Qualified reuse and recycling property also includes software necessary to operate such equipment. File 2009 taxes The property must meet the following requirements. File 2009 taxes The property must be depreciated under MACRS. File 2009 taxes The property must have a useful life of at least 5 years. File 2009 taxes The original use of the property must begin with you after August 31, 2008. File 2009 taxes You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after August 31, 2008, with no binding written contract for the acquisition in effect before September 1, 2008. File 2009 taxes The property must be placed in service for use in your trade or business after August 31, 2008. File 2009 taxes Excepted Property Qualified reuse and recycling property does not include any of the following. File 2009 taxes Any rolling stock or other equipment used to transport reuse or recyclable materials. File 2009 taxes Property required to be depreciated using the Alternative Depreciation System (ADS). File 2009 taxes For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . File 2009 taxes Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. File 2009 taxes Property for which you elected not to claim any special depreciation allowance (discussed later). File 2009 taxes Property placed in service and disposed of in the same tax year. File 2009 taxes Property converted from business use to personal use in the same tax year acquired. File 2009 taxes Property converted from personal use to business use in the same or later tax year may be qualified reuse and recycling property. File 2009 taxes Qualified Cellulosic Biofuel Plant Property You can take a 50% special depreciation allowance for qualified cellulosic biofuel plant property. File 2009 taxes Cellulosic biofuel is any liquid fuel which is produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis. File 2009 taxes Examples include bagasse (from sugar cane), corn stalks, and switchgrass. File 2009 taxes The property must meet the following requirements. File 2009 taxes The property is used in the United States solely to produce cellulosic biofuel. File 2009 taxes The original use of the property must begin with you after December 20, 2006. File 2009 taxes You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after December 20, 2006, with no binding written contract for acquisition in effect before December 21, 2006. File 2009 taxes The property must be placed in service for use in your trade or business or for the production of income after October 3, 2008, and before January 3, 2013. File 2009 taxes Note. File 2009 taxes For property placed in service after January 2, 2013, and before January 1, 2014, you can take a 50% special depreciation allowance for qualified second generation biofuel plant property that is used solely in the United States to produce second generation biofuel (as defined in section 40(b)(6)(E)). File 2009 taxes The other requirements for qualified second generation biofuel plant property to be eligible for the special depreciation allowance are identical to the requirements discussed for Qualified Cellulosic Biofuel Plant Property above. File 2009 taxes Special Rules Sale-leaseback. File 2009 taxes   If you sold qualified cellulosic biofuel plant property you placed in service after October 3, 2008, and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. File 2009 taxes   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before December 21, 2006. File 2009 taxes Syndicated leasing transactions. File 2009 taxes   If qualified cellulosic biofuel plant property is originally placed in service by a lessor after October 3, 2008, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. File 2009 taxes   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. File 2009 taxes Excepted Property Qualified cellulosic biofuel plant property does not include any of the following. File 2009 taxes Property placed in service and disposed of in the same tax year. File 2009 taxes Property converted from business use to personal use in the same tax year it is acquired. File 2009 taxes Property converted from personal use to business use in the same or later tax year may be qualified cellulosic biomass ethanol plant property. File 2009 taxes Property required to be depreciated using the Alternative Depreciation System (ADS). File 2009 taxes For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . File 2009 taxes Property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103 of the Internal Revenue Code. File 2009 taxes Property for which you elected not to claim any special depreciation allowance (discussed later). File 2009 taxes Property for which a deduction was taken under section 179C for certain qualified refinery property. File 2009 taxes Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. File 2009 taxes Qualified Disaster Assistance Property You can take a 50% special depreciation allowance for qualified disaster assistance property placed in service in federally declared disaster areas in which the disaster occurred in 2009. File 2009 taxes A list of the federally declared disaster areas is available at the FEMA website at www. File 2009 taxes fema. File 2009 taxes gov. File 2009 taxes Your property is qualified disaster assistance property if it meets the following requirements. File 2009 taxes The property is nonresidential real property or residential real property placed in service before January 1, 2014, in a federally declared disaster area in which the disaster occurred in 2009. File 2009 taxes You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) on or after the applicable disaster date, with no binding written contract for the acquisition in effect before the applicable disaster date. File 2009 taxes The property must rehabilitate property damaged, or replace property destroyed or condemned, as a result of the applicable federally declared disaster. File 2009 taxes The property must be similar in nature to, and located in the same county as, the rehabilitated or replaced property. File 2009 taxes The original use of the property within the applicable disaster area must have begun with you on or after the applicable disaster date. File 2009 taxes The property is placed in service by you on or before the date which is the last day of the fourth calendar year. File 2009 taxes Substantially all (80% or more) of the use of the property must be in the active conduct of your trade or business in a federally declared disaster area, occurring in 2009. File 2009 taxes It is not excepted property (explained later in Excepted Property ). File 2009 taxes Special Rules Sale-leaseback. File 2009 taxes   If you sold qualified disaster assistance property you placed in service after the applicable disaster date and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. File 2009 taxes   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before the applicable disaster date. File 2009 taxes Syndicated leasing transactions. File 2009 taxes   If qualified disaster assistance property is originally placed in service by a lessor after the applicable disaster date, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. File 2009 taxes   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. File 2009 taxes Excepted Property Qualified disaster assistance property does not include any of the following. File 2009 taxes Property required to be depreciated using the Alternative Depreciation System (ADS). File 2009 taxes For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . File 2009 taxes Property any portion of which is financed with the proceeds of a tax-exempt obligation under section 103 of the Internal Revenue Code. File 2009 taxes Any qualified revitalization building (defined later) placed in service before January 1, 2010, for which you have elected to claim a commercial revitalization deduction for qualified revitalization expenditures. File 2009 taxes Any property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises. File 2009 taxes Any property for which the special allowance under section 168(k) or section 1400N(d) of the Internal Revenue Code applies. File 2009 taxes Property for which you elected not to claim any special depreciation allowance (discussed later). File 2009 taxes Property placed in service and disposed of in the same tax year. File 2009 taxes Property converted from business use to personal use in the same tax year acquired. File 2009 taxes Property converted from personal use to business use in the same or later tax year may be qualified disaster assistance property. File 2009 taxes Any gambling or animal racing property (defined later). File 2009 taxes Qualified revitalization building. File 2009 taxes   This is a commercial building and its structural components that you placed in service in a renewal community before January 1, 2010. File 2009 taxes If the building is new, the original use of the building must begin with you. File 2009 taxes If the building is not new, you must substantially rehabilitate the building and then place it in service. File 2009 taxes For more information, including definitions of substantially rehabilitated building and qualified revitalization expenditure, see section 1400I(b) of the Internal Revenue Code. File 2009 taxes Gambling or animal racing property. File 2009 taxes   Gambling or animal racing property includes the following personal and real property. File 2009 taxes Any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing. File 2009 taxes Any real property determined by square footage (other than any portion that is less than 100 square feet) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing. File 2009 taxes Certain Qualified Property Acquired After December 31, 2007 You can take a 50% special depreciation deduction allowance for certain qualified property acquired after December 31, 2007. File 2009 taxes Your property is qualified property if it meets the following requirements. File 2009 taxes It is one of the following types of property. File 2009 taxes Tangible property depreciated under MACRS with a recovery period of 20 years or less. File 2009 taxes Water utility property. File 2009 taxes Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. File 2009 taxes (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. File 2009 taxes ) Qualified leasehold improvement property (defined under Qualified leasehold improvement property later). File 2009 taxes You must have acquired the property after December 31, 2007, with no binding written contract for the acquisition in effect before January 1, 2008. File 2009 taxes The property must be placed in service for use in your trade or business or for the production of income before January 1, 2014 (before January 1, 2015, for certain property with a long production period and certain aircraft (defined next)). File 2009 taxes The original use of the property must begin with you after December 31, 2007. File 2009 taxes It is not excepted property (explained later in Excepted property). File 2009 taxes Qualified leasehold improvement property. File 2009 taxes    Generally, this is any improvement to an interior part of a building that is nonresidential real property, if all the following requirements are met. File 2009 taxes The improvement is made under or according to a lease by the lessee (or any sublessee) or the lessor of that part of the building. File 2009 taxes That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. File 2009 taxes The improvement is placed in service more than 3 years after the date the building was first placed in service by any person. File 2009 taxes The improvement is section 1250 property. File 2009 taxes See chapter 3 in Publication 544, Sales and Other Dispositions of Assets, for the definition of section 1250 property. File 2009 taxes   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. File 2009 taxes The enlargement of the building. File 2009 taxes Any elevator or escalator. File 2009 taxes Any structural component benefiting a common area. File 2009 taxes The internal structural framework of the building. File 2009 taxes   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. File 2009 taxes However, a lease between related persons is not treated as a lease. File 2009 taxes Related persons. File 2009 taxes   For this purpose, the following are related persons. File 2009 taxes Members of an affiliated group. File 2009 taxes An individual and a member of his or her family, including only a spouse, child, parent, brother, sister, half-brother, half-sister, ancestor, and lineal descendant. File 2009 taxes A corporation and an individual who directly or indirectly owns 80% or more of the value of the outstanding stock of that corporation. File 2009 taxes Two corporations that are members of the same controlled group. File 2009 taxes A trust fiduciary and a corporation if 80% or more of the value of the outstanding stock is directly or indirectly owned by or for the trust or grantor of the trust. File 2009 taxes The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. File 2009 taxes The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the same person is the grantor of both trusts. File 2009 taxes A tax-exempt educational or charitable organization and any person (or, if that person is an individual, a member of that person's family) who directly or indirectly controls the organization. File 2009 taxes Two S corporations, and an S corporation and a regular corporation, if the same persons own 80% or more of the value of the outstanding stock of each corporation. File 2009 taxes A corporation and a partnership if the same persons own both of the following. File 2009 taxes 80% or more of the value of the outstanding stock of the corporation. File 2009 taxes 80% or more of the capital or profits interest in the partnership. File 2009 taxes The executor and beneficiary of any estate. File 2009 taxes Long Production Period Property To be qualified property, long production period property must meet the following requirements. File 2009 taxes It must meet the requirements in (2)-(5), above. File 2009 taxes The property has a recovery period of at least 10 years or is transportation property. File 2009 taxes Transportation property is tangible personal property used in the trade or business of transporting persons or property. File 2009 taxes The property is subject to section 263A of the Internal Revenue Code. File 2009 taxes The property has an estimated production period exceeding 1 year and an estimated production cost exceeding $1,000,000. File 2009 taxes Noncommercial Aircraft To be qualified property, noncommercial aircraft must meet the following requirements. File 2009 taxes It must meet the requirements in (2)-(5), above. File 2009 taxes The aircraft must not be tangible personal property used in the trade or business of transporting persons or property (except for agricultural or firefighting purposes). File 2009 taxes The aircraft must be purchased (as discussed under Property Acquired by Purchase in chapter 2 ) by a purchaser who at the time of the contract for purchase, makes a nonrefundable deposit of the lesser of 10% of the cost or $100,000. File 2009 taxes The aircraft must have an estimated production period exceeding four months and a cost exceeding $200,000. File 2009 taxes Special Rules Sale-leaseback. File 2009 taxes   If you sold qualified property you placed in service after December 31, 2007, and leased it back within 3 months after you originally placed in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. File 2009 taxes   The property will not qualify for the special depreciation allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before January 1, 2008. File 2009 taxes Syndicated leasing transactions. File 2009 taxes   If qualified property is originally placed in service by a lessor after December 31, 2007, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. File 2009 taxes   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of the last sale if the property is sold within 3 months after the final unit is placed in service and the period between the time the first and last units are placed in service does not exceed 12 months. File 2009 taxes Excepted Property Qualified property does not include any of the following. File 2009 taxes Property placed in service and disposed of in the same tax year. File 2009 taxes Property converted from business use to personal use in the same tax year acquired. File 2009 taxes Property converted from personal use to business use in the same or later tax year may be qualified property. File 2009 taxes Property required to be depreciated under the Alternative Depreciation System (ADS). File 2009 taxes This includes listed property used 50% or less in a qualified business use. File 2009 taxes For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . File 2009 taxes Qualified restaurant property (as defined in section 168(e)(7) of the Internal Revenue Code). File 2009 taxes Qualified retail improvement property (as defined in section 168(e)(8) of the Internal Revenue Code). File 2009 taxes Property for which you elected not to claim any special depreciation allowance (discussed later). File 2009 taxes Property for which you elected to accelerate certain credits in lieu of the special depreciation allowance (discussed next). File 2009 taxes Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 2 extension property (as defined in section 168(k)(4)(I)(iv)), unless the corporation made an election not to apply the section 168(k)(4) election to round 2 extension property for its first tax year ending after December 31, 2010. File 2009 taxes For 2013, round 2 extension property generally is long production period and noncommercial aircraft if acquired after March 31, 2008, and placed in service after December 31, 2012, but before January 1, 2014. File 2009 taxes An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 3 extension property (as defined in section 168(k)(4)(J)(iv)), unless the corporation makes an election not to apply the section 168(k)(4) election to round 3 extension property. File 2009 taxes If a corporation did not make a section 168(k)(4) election for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, the corporation may elect for its first tax year ending after December 31, 2012, to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for only round 3 extension property. File 2009 taxes If you make an election to accelerate these credits in lieu of claiming the special depreciation allowance for eligible property, you must not take the 50% special depreciation allowance for the property and must depreciate the basis in the property under MACRS using the straight line method. File 2009 taxes See Which Depreciation Method Applies in chapter 4 . File 2009 taxes Once made, the election cannot be revoked without IRS consent. File 2009 taxes Additional guidance. File 2009 taxes   For additional guidance on the election to accelerate the research or minimum tax credit in lieu of claiming the special depreciation allowance, see Rev. File 2009 taxes Proc. File 2009 taxes 2008-65 on page 1082 of Internal Revenue Bulletin 2008-44, available at www. File 2009 taxes irs. File 2009 taxes gov/pub/irs-irbs/irb08-44. File 2009 taxes pdf, Rev. File 2009 taxes Proc. File 2009 taxes 2009-16 on page 449 of Internal Revenue Bulletin 2009-06, available at www. File 2009 taxes irs. File 2009 taxes gov/pub/irs-irbs/irb09-06. File 2009 taxes pdf, and Rev. File 2009 taxes Proc. File 2009 taxes 2009-33 on page 150 of Internal Revenue Bulletin 2009-29, available at www. File 2009 taxes irs. File 2009 taxes gov/pub/irs-irbs/irb09-29. File 2009 taxes pdf. File 2009 taxes Also, see Form 3800, General Business Credit; Form 8827, Credit for Prior Year Minimum Tax — Corporations; and related instructions. File 2009 taxes   Additional guidance regarding the election to accelerate the minimum tax credit in lieu of claiming the special depreciation allowance for round 2 extension property and round 3 extension property may also be available in later Internal Revenue Bulletins available at www. File 2009 taxes irs. File 2009 taxes gov/irb. File 2009 taxes How Much Can You Deduct? Figure the special depreciation allowance by multiplying the depreciable basis of qualified reuse and recycling property, qualified cellulosic biofuel plant property, qualified disaster assistance property, and certain qualified property acquired after December 31, 2007, by 50%. File 2009 taxes For qualified property other than listed property, enter the special allowance on line 14 in Part II of Form 4562. File 2009 taxes For qualified property that is listed property, enter the special allowance on line 25 in Part V of Form 4562. File 2009 taxes If you place qualified property in service in a short tax year, you can take the full amount of a special depreciation allowance. File 2009 taxes Depreciable basis. File 2009 taxes   This is the property's cost or other basis multiplied by the percentage of business/investment use, reduced by the total amount of any credits and deductions allocable to the property. File 2009 taxes   The following are examples of some credits and deductions that reduce depreciable basis. File 2009 taxes Any section 179 deduction. File 2009 taxes Any deduction for removal of barriers to the disabled and the elderly. File 2009 taxes Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. File 2009 taxes Basis adjustment to investment credit property under section 50(c) of the Internal Revenue Code. File 2009 taxes   For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. File 2009 taxes   For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . File 2009 taxes For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . File 2009 taxes Depreciating the remaining cost. File 2009 taxes   After you figure your special depreciation allowance for your qualified property, you can use the remaining cost to figure your regular MACRS depreciation deduction (discussed in chapter 4 . File 2009 taxes Therefore, you must reduce the depreciable basis of the property by the special depreciation allowance before figuring your regular MACRS depreciation deduction. File 2009 taxes Example. File 2009 taxes On November 1, 2013, Tom Brown bought and placed in service in his business qualified property that cost $450,000. File 2009 taxes He did not elect to claim a section 179 deduction. File 2009 taxes He deducts 50% of the cost ($225,000) as a special depreciation allowance for 2013. File 2009 taxes He uses the remaining $225,000 of cost to figure his regular MACRS depreciation deduction for 2013 and later years. File 2009 taxes Like-kind exchanges and involuntary conversions. File 2009 taxes   If you acquire qualified property in a like-kind exchange or involuntary conversion, the carryover basis of the acquired property is eligible for a special depreciation allowance. File 2009 taxes After you figure your special allowance, you can use the remaining carryover basis to figure your regular MACRS depreciation deduction. File 2009 taxes In the year you claim the allowance (the year you place in service the property received in the exchange or dispose of involuntarily converted property), you must reduce the carryover basis of the property by the allowance before figuring your regular MACRS depreciation deduction. File 2009 taxes See Figuring the Deduction for Property Acquired in a Nontaxable Exchange , in chapter 4 under How Is the Depreciation Deduction Figured . File 2009 taxes The excess basis (the part of the acquired property's basis that exceeds its carryover basis) is also eligible for a special depreciation allowance. File 2009 taxes How Can You Elect Not To Claim an Allowance? You can elect, for any class of property, not to deduct any special allowances for all property in such class placed in service during the tax year. File 2009 taxes To make an election, attach a statement to your return indicating what election you are making and the class of property for which you are making the election. File 2009 taxes When to make election. File 2009 taxes   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. File 2009 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 original return (not including extensions). File 2009 taxes Attach the election statement to the amended return. File 2009 taxes On the amended return, write “Filed pursuant to section 301. File 2009 taxes 9100-2. File 2009 taxes ” Revoking an election. File 2009 taxes   Once you elect not to deduct a special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. File 2009 taxes A request to revoke the election is a request for a letter ruling. File 2009 taxes If you elect not to have any special allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. File 2009 taxes When Must You Recapture an Allowance? When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. File 2009 taxes See When Do You Recapture MACRS Depreciation in chapter 4 or more information. File 2009 taxes Recapture of allowance deducted for qualified GO Zone property. File 2009 taxes   If, in any year after the year you claim the special depreciation allowance for qualified GO Zone property (including specified GO Zone extension property), the property ceases to be used in the GO Zone, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. File 2009 taxes For additional guidance, see Notice 2008-25 on page 484 of Internal Revenue Bulletin 2008-9. File 2009 taxes Qualified cellulosic biomass ethanol plant property and qualified cellulosic biofuel plant property. File 2009 taxes   If, in any year after the year you claim the special depreciation allowance for any qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, the property ceases to be qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. File 2009 taxes Recapture of allowance for qualified Recovery Assistance property. File 2009 taxes   If, in any year after the year you claim the special depreciation allowance for qualified Recovery Assistance property, the property ceases to be used in the Kansas disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. File 2009 taxes For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. File 2009 taxes Recapture of allowance for qualified disaster assistance property. File 2009 taxes   If, in any year after the year you claim the special depreciation allowance for qualified disaster assistance property, the property ceases to be used in the applicable disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. File 2009 taxes   For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. File 2009 taxes Prev  Up  Next   Home   More Online Publications
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Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City  Street Address  Days/Hours of Service  Telephone* 
Washington, DC  77 K Street NE
Washington, DC 20002 

Monday-Friday 8:30 a.m.-4:30 p.m.

 

Services Provided 

(202) 803-9000

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call  (202) 803-9800 or 1-877-777-4778 or see  Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see  Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
Metro Plex 1
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The File 2009 Taxes

File 2009 taxes 31. File 2009 taxes   Tax on Unearned Income of Certain Children Table of Contents What's New Introduction Useful Items - You may want to see: Which Parent's Return To UseParents Who Do Not File a Joint Return 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 2009 taxes Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. File 2009 taxes Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. File 2009 taxes Figuring the Child's Tax (Form 8615, Part III) What's New Net Investment Income Tax. File 2009 taxes . File 2009 taxes  For tax years beginning after December 31, 2012, a child whose tax is figured on Form 8615 may be subject to the Net Investment Income Tax (NIIT). File 2009 taxes NIIT is a 3. File 2009 taxes 8% tax on the lesser of the net investment income or the excess of the child's modified adjusted gross income (MAGI) over the threshold amount. File 2009 taxes Use Form 8960, Net Investment Income Tax, to figure this tax. File 2009 taxes For more information on NIIT, go to www. File 2009 taxes irs. File 2009 taxes gov and enter “Net Investment Income Tax” in the search box. File 2009 taxes Introduction This chapter discusses the following two rules that may affect the tax on unearned income of certain children. File 2009 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 2009 taxes (See Parent's Election To Report Child's Interest and Dividends , later. File 2009 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 2009 taxes (See Tax for Certain Children Who Have Unearned Income , later. File 2009 taxes ) For these rules, the term “child” includes a legally adopted child and a stepchild. File 2009 taxes These rules apply whether or not the child is a dependent. File 2009 taxes Useful Items - You may want to see: Publication 929 Tax Rules for Children and Dependents Form (and Instructions) 8615 Tax for Certain Children Who Have Unearned Income 8814 Parents' Election To Report Child's Interest and Dividends 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 2009 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 2009 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 2009 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 2009 taxes Parents are married. File 2009 taxes   If the child's parents file separate returns, use the return of the parent with the greater taxable income. File 2009 taxes Parents not living together. File 2009 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 2009 taxes If the custodial parent is not considered unmarried, use the return of the parent with the greater taxable income. File 2009 taxes   For an explanation of when a married person living apart from his or her spouse is considered unmarried, see Head of Household in chapter 2. File 2009 taxes Parents are divorced. File 2009 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 2009 taxes Custodial parent remarried. File 2009 taxes   If the custodial parent has remarried, the stepparent (rather than the noncustodial parent) is treated as the child's other parent. File 2009 taxes Therefore, if the custodial parent and the stepparent file a joint return, use that joint return. File 2009 taxes Do not use the return of the noncustodial parent. File 2009 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 2009 taxes If the custodial parent and the stepparent are married but not living together, the earlier discussion under Parents not living together applies. File 2009 taxes Parents never married. File 2009 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 2009 taxes If the parents did not live together all year, the rules explained earlier under Parents are divorced apply. File 2009 taxes Widowed parent remarried. File 2009 taxes   If a widow or widower remarries, the new spouse is treated as the child's other parent. File 2009 taxes The rules explained earlier under Custodial parent remarried apply. File 2009 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 2009 taxes If you do, your child will not have to file a return. File 2009 taxes You can make this election only if all the following conditions are met. File 2009 taxes Your child was under age 19 (or under age 24 if a full-time student) at the end of the year. File 2009 taxes Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends). File 2009 taxes The child's gross income was less than $10,000. File 2009 taxes The child is required to file a return unless you make this election. File 2009 taxes The child does not file a joint return for the year. File 2009 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 2009 taxes No federal income tax was taken out of your child's income under the backup withholding rules. File 2009 taxes You are the parent whose return must be used when applying the special tax rules for children. File 2009 taxes (See Which Parent's Return To Use , earlier. File 2009 taxes ) These conditions are also shown in Figure 31-A. File 2009 taxes Certain January 1 birthdays. File 2009 taxes   A child born on January 1, 1995, is considered to be age 19 at the end of 2013. File 2009 taxes You cannot make this election for such a child unless the child was a full-time student. File 2009 taxes   A child born on January 1, 1990, is considered to be age 24 at the end of 2013. File 2009 taxes You cannot make this election for such a child. File 2009 taxes Full-time student. File 2009 taxes   A full-time student is a child who during some part of each of any 5 calendar months of the year was enrolled as a full-time student at a school, or took a full-time on-farm training course given by a school or a state, county, or local government agency. File 2009 taxes A school includes a technical, trade, or mechanical school. File 2009 taxes It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. File 2009 taxes How to make the election. File 2009 taxes   Make the election by attaching Form 8814 to your Form 1040. File 2009 taxes (If you make this election, you cannot file Form 1040A or Form 1040EZ. File 2009 taxes ) Attach a separate Form 8814 for each child for whom you make the election. File 2009 taxes You can make the election for one or more children and not for others. File 2009 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 2009 taxes Rate may be higher. File 2009 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 2009 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 2009 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 2009 taxes Deductions you cannot take. File 2009 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 2009 taxes The additional standard deduction if the child is blind. File 2009 taxes The deduction for a penalty on an early withdrawal of your child's savings. File 2009 taxes Itemized deductions (such as your child's investment expenses or charitable contributions). File 2009 taxes Reduced deductions or credits. File 2009 taxes   If you use Form 8814, your increased adjusted gross income may reduce certain deductions or credits on your return including the following. File 2009 taxes Deduction for contributions to a traditional individual retirement arrangement (IRA). File 2009 taxes Deduction for student loan interest. File 2009 taxes Itemized deductions for medical expenses, casualty and theft losses, and certain miscellaneous expenses. File 2009 taxes Credit for child and dependent care expenses. File 2009 taxes Child tax credit. File 2009 taxes Education tax credits. File 2009 taxes Earned income credit. File 2009 taxes Penalty for underpayment of estimated tax. File 2009 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 2009 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 2009 taxes See chapter 4 for more information. File 2009 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 2009 taxes Only the amount over $2,000 is added to your income. File 2009 taxes The amount over $2,000 is shown on Form 8814, line 6. File 2009 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 2009 taxes Include the amount from Form 8814, line 12, on Form 1040, line 21. File 2009 taxes Enter “Form 8814” on the dotted line next to line 21. File 2009 taxes If you file more than one Form 8814, include the total amounts from line 12 of all your Forms 8814 on Form 1040, line 21. File 2009 taxes Capital gain distributions and qualified dividends. File 2009 taxes   If your child's dividend income included any capital gain distributions, see Capital gain distributions under Figuring Child's Income in Publication 929, Part 2. File 2009 taxes If your child's dividend income included any qualified dividends, see Qualified dividends under Figuring Child's Income in Publication 929, Part 2. File 2009 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 2009 taxes This tax is added to the tax figured on your income. File 2009 taxes This additional tax is the smaller of: 10% × (your child's gross income − $1,000), or $100. File 2009 taxes Include the amount from line 15 of all your Forms 8814 in the total on Form 1040, line 44. File 2009 taxes Check box a on Form 1040, line 44. File 2009 taxes Figure 31-A. File 2009 taxes Can You Include Your Child's Income On Your Tax Return? Please click here for the text description of the image. File 2009 taxes Figure 31–A. File 2009 taxes Can You Include Your Child's Income On Your Tax Return? 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 2009 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 2009 taxes Attach the completed form to the child's Form 1040 or Form 1040A. File 2009 taxes When Form 8615 must be filed. File 2009 taxes   Form 8615 must be filed for a child if all of the following statements are true. File 2009 taxes The child's investment income was more than $2,000. File 2009 taxes The child is required to file a return for 2013. File 2009 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 2009 taxes At least one of the child's parents was alive at the end of 2013. File 2009 taxes The child does not file a joint return for 2013. File 2009 taxes These conditions are also shown in  Figure 31-B. File 2009 taxes Earned income. File 2009 taxes   Earned income includes salaries, wages, tips, and other payments received for personal services performed. File 2009 taxes It does not include unearned income as defined later in this chapter. File 2009 taxes Support. File 2009 taxes   Your child's support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. File 2009 taxes To figure your child's support, count support provided by you, your child, and others. File 2009 taxes However, a scholarship received by your child is not considered support if your child is a full-time student. File 2009 taxes See chapter 3 for details about support. File 2009 taxes Certain January 1 birthdays. File 2009 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 2009 taxes Figure 31-B. File 2009 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 2009 taxes Figure 31-B. File 2009 taxes Do You Have To Use Form 8615 To Figure Your Child's Tax?    IF a child was born on. File 2009 taxes . File 2009 taxes . File 2009 taxes THEN, at the end of 2013, the child is considered to be. File 2009 taxes . File 2009 taxes . File 2009 taxes January 1, 1996 18* January 1, 1995 19** January 1, 1990 24*** *This child is not under age 18. File 2009 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 2009 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 2009 taxes  ***Do not use Form 8615 for this child. File 2009 taxes 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 2009 taxes (If the parents filed a joint return, enter the name and social security number listed first on the joint return. File 2009 taxes ) On line C, check the box for the parent's filing status. File 2009 taxes See Which Parent's Return To Use at the beginning of this chapter for information on which parent's return information must be used on Form 8615. File 2009 taxes Parent with different tax year. File 2009 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 2009 taxes Parent's return information not known timely. File 2009 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 2009 taxes   You can use any reasonable estimate. File 2009 taxes This includes using information from last year's return. File 2009 taxes If you use an estimated amount on Form 8615, enter “Estimated” on the line next to the amount. File 2009 taxes    When you get the correct information, file an amended return on Form 1040X, Amended U. File 2009 taxes S. File 2009 taxes Individual Income Tax Return. File 2009 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 2009 taxes S. File 2009 taxes Individual Income Tax Return. File 2009 taxes Extensions are discussed in chapter 1. File 2009 taxes Step 1. File 2009 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 2009 taxes To do that, use Form 8615, Part I. File 2009 taxes Line 1 (unearned income). File 2009 taxes   If the child had no earned income, enter on this line the adjusted gross income shown on the child's return. File 2009 taxes Adjusted gross income is shown on Form 1040, line 38, or Form 1040A, line 22. File 2009 taxes Form 1040EZ cannot be used if Form 8615 must be filed. File 2009 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 2009 taxes   However, if the child has: excluded any foreign earned income, deducted either a loss from self-employment, or deducted a net operating loss from another year, then use the Alternate Worksheet for Form 8615, Line 1, in Publication 929 to figure the amount to enter on Form 8615, line 1. File 2009 taxes Unearned income defined. File 2009 taxes   Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually done. File 2009 taxes It includes taxable interest, dividends (including capital gain distributions), capital gains, unemployment compensation, the taxable part of social security and pension payments, and certain distributions from trusts. File 2009 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 2009 taxes Nontaxable income. File 2009 taxes   For this purpose, unearned income includes only amounts the child must include in total income. File 2009 taxes Nontaxable unearned income, such as tax-exempt interest and the nontaxable part of social security and pension payments, is not included. File 2009 taxes Income from property received as a gift. File 2009 taxes   A child's unearned income includes all income produced by property belonging to the child. File 2009 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 2009 taxes   A child's unearned income includes income produced by property given as a gift to the child. File 2009 taxes This includes gifts to the child from grandparents or any other person and gifts made under the Uniform Gift to Minors Act. File 2009 taxes Example. File 2009 taxes Amanda Black, age 13, received the following income. File 2009 taxes Dividends — $800 Wages — $2,100 Taxable interest — $1,200 Tax-exempt interest — $100 Net capital gains — $100 The dividends were qualified dividends on stock given to her by her grandparents. File 2009 taxes Amanda's unearned income is $2,100. File 2009 taxes This is the total of the dividends ($800), taxable interest ($1,200), and net capital gains ($100). File 2009 taxes Her wages are earned (not unearned) income because they are received for work actually done. File 2009 taxes Her tax-exempt interest is not included because it is nontaxable. File 2009 taxes Trust income. File 2009 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 2009 taxes   However, for purposes of completing Form 8615, a taxable distribution from a qualified disability trust is considered earned income, not unearned income. File 2009 taxes Line 2 (deductions). File 2009 taxes   If the child does not itemize deductions on Schedule A (Form 1040), enter $2,000 on line 2. File 2009 taxes   If the child does itemize 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, that are directly connected with the production of unearned income entered on line 1, or $2,000. File 2009 taxes Directly connected. File 2009 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 2009 taxes These expenses include custodian fees and service charges, service fees to collect taxable interest and dividends, and certain investment counsel fees. File 2009 taxes   These expenses are added to certain other miscellaneous itemized deductions on Schedule A (Form 1040). File 2009 taxes Only the amount greater than 2% of the child's adjusted gross income can be deducted. File 2009 taxes See chapter 28 for more information. File 2009 taxes Example 1. File 2009 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% limit) that are directly connected with his unearned income. File 2009 taxes His adjusted gross income is $8,000, which is entered on Form 1040, line 38, and on Form 8615, line 1. File 2009 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 2009 taxes Example 2. File 2009 taxes Eleanor, age 8, has unearned income of $16,000 and an early withdrawal penalty of $100. File 2009 taxes She has no other income. File 2009 taxes She has itemized deductions of $1,050 (net of the 2% limit) that are directly connected with the production of her unearned income. File 2009 taxes Her adjusted gross income, entered on line 1, is $15,900 ($16,000 − $100). File 2009 taxes The amount on line 2 is $2,050. File 2009 taxes This is the larger of: $1,000 plus the $1,050 of directly connected itemized deductions, or $2,000. File 2009 taxes Line 3. File 2009 taxes   Subtract line 2 from line 1 and enter the result on this line. File 2009 taxes If zero or less, do not complete the rest of the form. File 2009 taxes However, you must still attach Form 8615 to the child's tax return. File 2009 taxes Figure the tax on the child's taxable income in the normal manner. File 2009 taxes Line 4 (child's taxable income). File 2009 taxes   Enter on line 4 the child's taxable income from Form 1040, line 43, or Form 1040A, line 27. File 2009 taxes   However, if the child files Form 2555 or 2555-EZ to claim the foreign earned income exclusion, housing exclusion, or housing deduction, see the Form 8615 instructions or Pub. File 2009 taxes 929. File 2009 taxes Line 5 (net unearned income). File 2009 taxes   A child's net unearned income cannot be more than his or her taxable income. File 2009 taxes Enter on Form 8615, line 5, the smaller of line 3 or line 4. File 2009 taxes This is the child's net unearned income. File 2009 taxes   If zero or less, do not complete the rest of the form. File 2009 taxes However, you must still attach Form 8615 to the child's tax return. File 2009 taxes Figure the tax on the child's taxable income in the normal manner. File 2009 taxes Step 2. File 2009 taxes Figuring 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 2009 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 2009 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 2009 taxes For example, do not refigure the medical expense deduction. File 2009 taxes Figure the tentative tax on Form 8615, lines 6 through 13. File 2009 taxes Note. File 2009 taxes If the child or parent has any capital gains or losses, get Publication 929 for help in completing Form 8615, Part II. File 2009 taxes Line 6 (parent's taxable income). File 2009 taxes   Enter on line 6 the parent's taxable income from Form 1040, line 43, Form 1040A, line 27, or Form 1040EZ, line 6. File 2009 taxes   If the Foreign Earned Income Tax Worksheet (in the Form 1040 instructions) was used to figure the parent's tax, enter the amount from line 3 of that worksheet instead of the parent's taxable income. File 2009 taxes Line 7 (net unearned income of other children). File 2009 taxes   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 2009 taxes Do not include the amount from line 5 of the Form 8615 being completed. File 2009 taxes Example. File 2009 taxes Paul and Jane Persimmon have three children, Sharon, Jerry, and Mike, who must attach Form 8615 to their tax returns. File 2009 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 2009 taxes Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000). File 2009 taxes Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600). File 2009 taxes Other children's information not available. File 2009 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 2009 taxes See Parent's return information not known timely , earlier. File 2009 taxes Line 11 (tentative tax). File 2009 taxes   Subtract line 10 from line 9 and enter the result on this line. File 2009 taxes This is the tentative tax. File 2009 taxes   If line 7 is blank, skip lines 12a and 12b and enter the amount from line 11 on line 13. File 2009 taxes Also skip the discussion for lines 12a and 12b that follows. File 2009 taxes Lines 12a and 12b (dividing the tentative tax). File 2009 taxes   If an amount is entered on line 7, divide the tentative tax shown on line 11 among the children according to each child's share of the total net unearned income. File 2009 taxes This is done on lines 12a, 12b, and 13. File 2009 taxes Add the amount on line 7 to the amount on line 5 and enter the total on line 12a. File 2009 taxes Divide the amount on line 5 by the amount on line 12a and enter the result, as a decimal, on line 12b. File 2009 taxes Example. File 2009 taxes In the earlier example under Line 7 (net unearned income of other children), Sharon's Form 8615 shows $1,600 on line 7. File 2009 taxes The amount entered on line 12a is $2,400, the total of the amounts on lines 5 and 7 ($800 + $1,600). File 2009 taxes The decimal on line 12b is  . File 2009 taxes 333, figured as follows and rounded to three places. File 2009 taxes   $800 = . File 2009 taxes 333     $2,400   Step 3. File 2009 taxes Figuring the Child's Tax (Form 8615, Part III) The final step in figuring a child's tax using Form 8615 is to determine the larger of: The total of: The child's share of the tentative tax based on the parent's tax rate, plus The tax on the child's taxable income in excess of net unearned income, figured at the child's tax rate, or The tax on the child's taxable income, figured at the child's tax rate. File 2009 taxes This is the child's tax. File 2009 taxes It is figured on Form 8615, lines 14 through 18. File 2009 taxes Alternative minimum tax. File 2009 taxes   A child may be subject to alternative minimum tax (AMT) if he or she has certain items given preferential treatment under the tax law. File 2009 taxes See Alternative Minimum Tax (AMT) in chapter 30. File 2009 taxes    For more information on who is liable for AMT and how to figure it, see Form 6251, Alternative Minimum Tax—Individuals. File 2009 taxes For information on special limits that apply to a child who files Form 6251, see Certain Children Under Age 24 in the Instructions for Form 6251. File 2009 taxes Prev  Up  Next   Home   More Online Publications