I have one minor child (no siblings) who has capital gain (78K long term capital gain) in 2019 and needs to pay kiddie tax. I chose the pre-TCJA rules because I thought it would result in lower tax than using the trust tax rate. ( I have 58K of taxable income in 2019 filing married separate.) However, the result was contrary and the calculation using Turbo Tax was that the child pays about 4K more tax compared to using trust tax rate.
Is the kiddie tax rule for 2019 different from the one in effect during past years, like 2016 when my child filed the form 8615? I thought the rules remain the same, though not 100% sure.
I noted that the current tax form 8615 has changed from 2016. Especially in the 2019 instructions of form 8615, please look at line 11 in the '2019 Tentative Tax Based on the Tax Rate of Your Parent Worksheet' (page 5 of instructions), which is not the same as line 15 in the previous year's 8615. I think that the current worksheet makes the final tax larger than what the kiddie tax rule requires, assuming that the kiddie tax rules have not changed since. (I could not write up all the details here, but if you compare the current form/instructions and the 2016 form for the part I mentioned, you will see what I mean to say - sorry about that).
Simply put, according to the current form/instructions, it seems that the kiddie taxes are 1) the traditionally calculated kiddie tax + 2) tax calculated solely on child's income. 1) and 2) should not be added, but should be compared and the child should pay the higher amount, to my understanding.
Perhaps I may be wrong. If anyone has some insight on this matter, please share your thought. I'd appreciate.
