Dependent FT time student received UC for Covid Question

[confusedrf]

I am entering data for my full time college student, dependent daughter on her return. It us usually straight forward. She makes about 4K over the summer at an amusement park and gets a small ($150 or so) federal refund each year.

This year, her job at the amusement park was cut short by the pandemic close down.  She qualified for PA PUA insurance. (Regular UC + extra $ due to pandemic). She finished up at the amusement park and decided to take a PT job at a local store.  She is still a FT student and a dependent.

Her income is about $4k from the brief time at the  amusement park and store and another $14K from the PA PUA. The PA PUA withheld $1400 in federal  taxes.

In my first walk thru Turbo Tax, I either missed or it did not prompt for UC.  I had entered $4K income and it said she was getting a refund of $130.   I knew the UC must be entered. did a search and went to the form to enter it.  I entered the 14K and the tax withheld: $1400.

I finished up. It did its review. It found an area that I needed to fill in. I need to input ***MY and MY WIFE'S** taxable income off our 1040 form, line 15.  I do not EVER recall having to do this before?????
Anyway, when done, suddenly, instead of getting the $130 refund, she owes about $2400.

Sorry, hopefully this one is more readable...not sure what happened to the other one.

I have no problem with this...but it t correct??? 

So she made about $4k working, got 14K in UC and paid in a total of  about $1600 in fed taxes.

So on 18K income she will pay $1600(total withheld)  + $2400 it says she owes for a total of $4000.

Does that sound right? Are ***MY** wages somehow figuring because she is dependent or something.  I just want to make sure this makes sense. The PUA was a blessing don't get me wrong...but does $4K tax on 18K for a dependent make sense?

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Somehow someone ready my other post that for some reason has the margins screwed  up!  They said they believed that since PA PUA (Pennsylvania pandemic unemployment insurance - regular rate UC + extra $$ for the pandemic for a limited period of time) is not earned income and the filer, my daughter is a dependent that it must be taxed at the parent's tax rate.

How did TT know the rate? Was that when it found 'missing data' during the check phase and I had to enter the line 15 off my 1040 form?  It is not accessing the effective rate TT shows on MY form.  Perhaps it uses a non effective rate? The rate seems to be 25% which is no where near my effective rate...but perhaps there is non adjusted rate it uses?

I just want to make sure it all makes sense!

[WendyN2]

Based on your posts, I am assuming that your daughter is under the age of 18 as that is the age at which the parent has to report any unearned income on their tax return and not on hers. If she is, and you choose to do so (report her information on your tax return), you do not need to file for her as all of the information (including withholding amounts) will flow through your return. 

If she is above age 18 and (I am sure) under 24, then the TurboTax system will decide as you fill out the questionnaire for her what all the program will or might need from you for information. However, as I walk through the system pretending to be you and enter all above information as you have provided, I am not getting any errors or alerts asking for "my parents" line 15 taxable income. It takes me right to the page where it is telling me that I will be receiving a refund of $1556 FED and $120 PA. Please try again from the beginning as I am thinking you must have clicked on something you did not need to. 

Further information for you (but I do not believe it applies to you, just some FYI):

The Kiddie Tax for 2020 and Later

Under these rules, children pay tax at their own income tax rate on unearned income they receive up to a threshold amount--for 2020, the threshold is $2,200.So, the PA PUA is only nontaxable up to the first $2,200. 

Note, per PA Dept of Revenue,All benefits are considered gross income for federal income tax purposes.

This includes benefits paid under these programs:

• Unemployment Compensation (UC)
• Pandemic Emergency Unemployment Compensation (PEUC)
• State Extended Benefits (EB)
• Trade Adjustment Assistance (TAA)
• Pandemic Unemployment Assistance (PUA)
• Federal Pandemic Unemployment Compensation (FPUC)
• Lost Wage Assistance (LWA)

The department reports these benefits to the Internal Revenue Service (IRS) for the calendar year in which the benefits were paid.

These benefits are not taxable by the Commonwealth of Pennsylvania and local governments.

[confusedrf]

The very first time I did it I entered her 4K of regular earnings and it showed me she was getting back about 130 bucks.

Then I remembered her 1099 g. I didn't remember it prompting me for this so I did a search found the form and filled out the 1099g PUA information the 14,000  UC and 1100 dollars federal tax withheld.

I don't recall exactly what the numbers were at this point. However when it got to the section where it reviews it popped up a form and had me put in my personal 1040 line 15 information.

At that point she went from $130 refund to owing about $2,400 or something.

In another post a kind person told me that since she is a full-time student dependent her total income will be taxed at my marginal rate. I guess my effective rate and my marginal rate are two different things! She put a chart in her post. When I looked for the row for  married filing jointly for our 1040 line 15 taxable income it said 22 percent.

So it feels weird she'd have to pay so much tax but I assume the dependency factors in.

I will rerun the numbers tomorrow but I'm feeling a little better about this.... Must someone thinks otherwise.

[confusedrf]

I think, with her being a dependent, it is accessing my taxable wages (thats why it asked me to enter my line 15 off my 1040) and perhaps hers and accessing about 22% tax.  That jives with another post that shows this table with % and wages. So perhaps it is taking my wages + hers and landing in the 22% bucket...not sure..it close to the right amount but actually a little less than 22%.

Thoughts...

er it) plus her 

[CatinaT1]

Form 8615 must be filed for a child who is a full-time student (at least age 19 and under age 24 at the end of 2020) and who didn’t have earned income that was more than half of the child's support, AND had more than $2,200 of unearned income.

Unemployment is considered unearned and it's what is triggering this.

The unearned income over $2,200 is taxed at the parent's rate if the parent's rate is higher than the child's. Form 8615 to used to figure the child's tax.  You want to make sure you are entering your filing status, your income from line 15 and your total tax from line 16.  Only the unearned income over the $2,200 is taxed at your rate, not all her income.

For more information, see this link:  Form 8615

[confusedrf]

I appreciate the response but I don't think anyone is specifically answered my question. I apologize if I've made it confusing.   :(

if I my line 15 taxable wages are say $80,500... and her unearned income... less the 2200... is 12,000 ... Considering the chart above... am I looking at the single(her) or married(me)  column and more specifically am I looking for the row for  $80,500 or $90,700 (my taxable income plus her unearned taxable) to get the percentage due. By the way, in this example I see the percentage is 22% in either case....BUT...  if it's indeed only supposed to be looking at MY 80,500 in wages, if I lower that to say 79,000 I would think that would bump the percentage due  to 12 percent.... but it's not it reduces it a little but not by a full 10%

Final question does it just look at my line 15 wages to determine the percentage from the chart above or does it look at my line 15 wages plus her unearned income added together to determine the percentage?