For 2017, the kiddie tax limits allow $1,050 to be received without being taxed and the next $1,050 to be taxed at the child's rate, while any unearned income in excess of $2,100 is taxed at the parent's top marginal rate. My daughter has $3,435 unearned income as capital gain in 2017. Since this amount is more than $2,100, I have to file form 1040 and 8816 as Kiddie tax for her. Now I have problem on Virginia State Tax: 1) Federal Adjusted Gross Income is $2,385, but why TurboTax shows $3,435 not $2,385? 2) I have claimed my daughter to be my dependent, but why TurboTax shows 1 exemption of $930 and makes VA Taxable Income to be $2,505? 3) Even though VA Taxable Income is $2,505, but why TurboTax shows Amount of Tax is $0? Are there any Virginia tax exemptions for kiddie tax that I am not aware?
