topic Form 8615 Kiddie tax in Get your taxes done using TurboTax

Form 8615 Kiddie tax

lbaldo — Wed, 19 Feb 2025 17:37:17 GMT

This form is not working for my situation which is that the parent tax rate is actually 0%, so lower than the child tax rate. There are several areas that are a problem. first, it forced me to check "single" as the parent tax rate when I file "head of household." Then, it didn't prompt me to enter how much of the total income was LTCG and qualified dividents. I had to add those manually. Do that "exploded" the calculations, creating a tax that was double my daughters taxable income. It works correctly ONLY if you assume all the parental income is earned. I manually did all the entry manipulations and the manual math.

So, my only choice at this point is to manually enter a "0" in line 9, which makes the tax return ineligible for e-filing. Yesterday, I talked to someone on the phone at TT who offered to call back and help me go through the entire form, but then she ghosted me. I just want to make sure I am doing it correctly, so I don't attract the attention of the IRS for suspected tax evasion because it's likely rare the parents rate is 0%. I did the math, had I taken the unqualified 529 deduction that triggered this mess instead of having it distributed to my daughter, I would have saved myself $800 as all I would have had to pay was the 10% penalty. Hopefully Turbotax is calcuIating my taxes correctly. I checked this to make sure the form wasn't making my daughter pay what it thought was MY incremental tax instead of having HER income taxed at my "supposed" rate.

Since this will unlikely be fixed in a usable time frame (because it wasn't fixed last year when pointed out), can you offer me a free review for accuracy??

Re: Form 8615 Kiddie tax

RobertB4444 — Wed, 19 Feb 2025 19:13:16 GMT

If you would benefit from entering the income as a distribution and paying the penalty why not enter it that way? That seems the easiest fix to this issue.

You can contact TurboTax support for any questions about the cost of your tax program.

Contact them here.

@lbaldo

Re: Form 8615 Kiddie tax

lbaldo — Wed, 19 Feb 2025 19:42:29 GMT

If the 1099-q has my daughter’s name on it I am pretty sure that’s the tax return it needs to be on. Are you saying I am incorrect?

Re: Form 8615 Kiddie tax

AmyC — Wed, 19 Feb 2025 19:53:08 GMT

We are saying the IRS is complicated.

If you are you the account owner and you take the distribution without passing it on to the beneficiary for qualified expenses, then you may report the distribution.
If the beneficiary did not use the distribution, they may be subject to tax.

This leaves you to determine which scenario happened, report the form, and be able to show that scenario, if asked by the IRS.

Re: Form 8615 Kiddie tax

lbaldo — Wed, 19 Feb 2025 20:13:32 GMT

Thank you. I explained the scenario. The distribution went to my daughter. I regret it, but it did and there is no 1099Q in my name so not sure that would fly. I would very much prefer to report the distribution on my form, but not having a 1099 Q in my name seems like an easy thing for the IRS computers to flag. My original question was how to get the calculations to work on the 8516 form. It sounds like you are admitting that it won't work because my tax rate is lower than my daughters. So, are you agreeing then that my only alternative is to override the form and manually enter a "0" on line 9? It will raise a red flag but IRS just needs to look at my tax return. I just wanted to make sure I was following the IRS instructions correctly. I only am asking you because the form doesn't work for my circumstance. Local accountants won't help me with just this form, they want me to pay them to do the entire tax return which I wouldn't need if the form was set up to handle all situations. I can't be the first divorced retiree with a child in college. I made a mistake in who the distribution went to, but I don't think I am the only one considering very similar questions posted last year about this form. I can't see my original question so not sure you can either.

Re: Form 8615 Kiddie tax

RobertB4444 — Wed, 19 Feb 2025 21:11:01 GMT

In your scenario the amount on line 9 should be zero. So it is ok to enter it there especially if the IRS has a return that agrees with it.

Here's a TurbTax article on the kiddie tax.

@lbaldo