Dependent and Capital Gains

[Huskypup]

Hi! I just learned that my dependent made capital gains in 2021. Dependent will be filing own taxes to report capital gains.

Under "My Info", there is a question: "Did 'dependent' make $4,300.00 or more in 2021?" 

1.)  Do I answer "Yes" if dependent made more than that in capital gains?

2.) If so, then what happens to all of the dependent's info. What about the 1095-A info? Should my dependent put that info in theirs instead of mine for 2021 tax year?

 Thank you!

[Mike9241]

to better answer your question and t properly advise you on any filing requirements that the dependent may have. what was their age on 12/31/2021.  it is also necessary to determine if the dependent is a qualifying child or qualifying relative,  

this affects their tax reporting, your tax reporting, possible kiddie tax and properly completing form 8962

you can claim them as a qualifying child if all these tests are met
• they have the same principal abode as you for more than ½ the tax year. Temporary absences like for school are ignored
• if they are not a full-time student, they are under 19 at the end of the tax year. If a full-time student, they are under 24 at the end of the tax year.
• they hasn't provided over ½ their own support
• they didn't file a joint return unless there was no tax liability but merely filing jointly to facilitate refund of taxes withheld or estimates paid

or you can claim them as a qualifying relative if all these tests are met
• their gross income for 2021 is less than $4,300  (this includes capital gains but not capital losses)
• you provided over ½ their support
• they aren't a qualifying child of another taxpayer

[JillS56]

Correct, you would answer Yes to the question "Did dependent make $4,300 or more in 2021?"   

For the 1095-A the dependent will have to report his percentage of the 1095-A on his return or the IRS will reject his return.

As for the information on the dependent, simply answer the questions for the dependent, and when you come to the question "Did (dependents name) paid for more than half their living expenses?" answer Yes.   This will remove the dependent for the current tax year.    Next year the dependent will still be listed, and you can claim them, if eligible to be a dependent.

[Huskypup]

Thank you. What do you mean 1095-A percentage? Does this mean how much dependent paid in medical insurance? Even if I paid all?

Also, does dependent have to answer NO on question "Someone can claim me as dependent on their tax return.". Since I have to remove dependent for 2021, I'd figure that also has to change to NO.

[RaifH]

Yes, that is correct. If this person had more than $4,300 of gross income and was over the age of 18 or 24 if a full-time student, then they are not eligible to be claimed by anyone. They should indicate that by answering No to Someone can claim me as dependent on their tax return.

If your marketplace insurance reported on 1095-A has both yourself and this person as covered individuals, then you will have to allocate the premiums between yourself and the other taxpayer.

If this person is your child who does not qualify as your dependent but is under the age of 26, then you may allocate the premiums however you wish if you received advanced premium tax credit. To allocate your premiums in TurboTax:

1. In Federal > Deductions & Credits scroll down to Medical and click Start/Revisit next to Affordable Care Act (Form 1095-A)
2. Enter the information as it appears on Form 1095-A
3. Let us know if these situations apply to you click I shared the policy with another taxpayer who's not on my taxes.
4. Enter the allocation information that you have determined. Please note, the three percentages must be equal, if you are sharing 75% of the premium percentage, you must also share 75% of the SLCSP percentage and the advanced payment of PTC percentage. 

If you claimed 75%, the other person must claim the other 25%. Do not do the allocation yourself from the numbers on the form. Enter Form 1095-A with the exact numbers it reports. 

If you did not receive any advanced premium tax credit, then the process is different. 

[dixoche1]

Check all the IRS rules and Regulations on Child age and income.

[Huskypup]

Thank you for the answers. I will pass the info to the dependent.

Out of curiosity...

I came across that question 1.) "Someone else can claim me as dependent on their tax return". YES or NO.

Answered NO as instructed.

 Then, I did check Yes and the question appeared 2.) "And this person will claim me on their 2021 tax return." YES or NO.  Why is this question here? Is it suppose give people like me a choice whether or not to claim a dependent? Even though if the dependent is qualified, but can choose NO?

 I would like to know for future reference.

[Vanessa A]

Yes, it is giving someone a choice to say that them and their parents are choosing for to allow the child to claim themselves even though the parent or whoever would otherwise be able to claim them.