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Tax bill for college student

My 19 yr old received enhanced unemployment benefits over the summer.  Even though we had tax withheld he now has a tax bill of over $3000.  He used that money to pay for his school and cannot afford the bill.  If I don't claim him on my taxes it appears that he will get a refund if he files his own taxes (my refund goes down but I wouldn't owe anything).  Does that make sense?  Can I still claim him next year?

2 Replies
Expert Alumni

Tax bill for college student

The question is not whether you should claim your son on your tax return for 2020, the real question is does he qualify as your dependent.  If he qualifies as your dependent, the he is required to check the box on his return indicating that someone else can claim him.  For more information, see:


Rules for Claiming a Dependent on Your Tax Return

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Opus 17
Level 15

Tax bill for college student

See this.


Basically, the "kiddie tax" taxes a child at a higher rate on their unearned income.  This is normally income from investments, so that the parents can't put income in their child's name to pay a lower tax rate.  However, unearned income also includes unemployment compensation, so if the child received unemployment this year, and is under age 24 and its parents are still alive, the child is probably subject to the kiddie tax.  There is a section of the program you will need to review, "Child's income under age 24" in the Uncommon Income section. 


In this specific case, a 19 year old who attends school full time is subject to the kiddie tax, whether or not you claim him as a dependent, unless the child's income earned from working was more than half the child's total financial support.  You probably qualify to claim the child as s dependent, in which case he must answer "yes" to the question, "Can you be claimed as a dependent", even if you don't want to claim him.   Answering "no" in order to save on the kiddie tax or collect a stimulus rebate is tax fraud.


In fact, even if the child answer's "no", Turbotax should ask about the kiddie tax and calculate it if the child's income earned from working is not more than half the child's financial support.  If Turbotax does not prompt you to do the calculation, that does not mean the IRS won't come for it's money sooner or later. 



The amount of kiddie tax is currently being calculated incorrectly by turbotax, so you might want to wait a few days before filing to see if it gets fixed. Or, when the interview asks you about your parent's income, add $1 of qualified dividend income even if they don't have dividends, this seems to fix the error in the program. 



*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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