My son is 23 and graduated college last May. He had a part time job in 2017 with only 6,000 in income. he sold some stock in 2017 that he purchased with his own money and had a cap gain of 4500. turbotax forced him to have to pay the "kiddie tax" based on my income. is there any way to avoid this since it his his money that had the actual gain
Unfortunately not through tax provisions. Please click on the following link for more information from the IRS on the Kiddie Tax - Internal Revenue Service. The only way he could get around this is to be able to file as an independent, but your brief description does sound like he was still your qualifying child, so, unless he either lived away from home more than 6 months (his schooling does not count but time after graduation would count), then he would have to file Form 8615 and pay tax at your marginal rate on his capital gains.
The intention behind this law is to close a tax-shelter loophole for higher-income families by not allowing them to simply move capital gain and other unearned income over to their dependent children so that such earnings can be taxed at the dependent's marginal rate (which for long-term capital gains is zero). This law makes sense from this standpoint but does have an unintended consequence: what your son is experiencing this year.
Thus, there's no real way through the tax return to avoid the Kiddie Tax, but you can always decide to help your son keep his earnings by covering his tax if you so choose. (You can't claim the amount on your return, but you can give him a "helping hand" so to speak).
Unfortunately not through tax provisions. Please click on the following link for more information from the IRS on the Kiddie Tax - Internal Revenue Service. The only way he could get around this is to be able to file as an independent, but your brief description does sound like he was still your qualifying child, so, unless he either lived away from home more than 6 months (his schooling does not count but time after graduation would count), then he would have to file Form 8615 and pay tax at your marginal rate on his capital gains.
The intention behind this law is to close a tax-shelter loophole for higher-income families by not allowing them to simply move capital gain and other unearned income over to their dependent children so that such earnings can be taxed at the dependent's marginal rate (which for long-term capital gains is zero). This law makes sense from this standpoint but does have an unintended consequence: what your son is experiencing this year.
Thus, there's no real way through the tax return to avoid the Kiddie Tax, but you can always decide to help your son keep his earnings by covering his tax if you so choose. (You can't claim the amount on your return, but you can give him a "helping hand" so to speak).
Kiddie tax always applies to the child's own money. The fact that it was his money is no help in avoiding the kiddie tax. The tax is specifically imposed on investment income earned on the child's money.
TurboTax did not force your son to pay the kiddie tax. The tax law forced him to pay it. TurboTax is just following the law.