Form 8615-Unearned Income for Children

[eeshull]

Last and prior years I had no problem filling in the information in TurboTax Premier for a dependent's unearned income return. The form populated with the required information. This year the software isn't asking me for the parent's tax ID or taxable income, nor is the form coming up. The box has been checked that he's a dependent, and he's getting the reduced standard deduction, the Qualified dividends of $582 and Capital Gains of $2809 have been input, yet no tax is generated.  The parent's return (already processed) claimed the child on his return. Thoughts?

[rjs]

Go to the Child's Income topic and see if it starts asking the questions about the parents, or if it tells you that you are not required to file Form 8615. If it says Form 8615 is not required, it will tell you the reason.

If it says his unearned income was $2,300 or less, check your entries for the capital gains. Was $2,809 the net gain, or the total proceeds of investment sales?

Is the dependent still in the age range for Form 8615? Was he under 19 at the end of 2022, or under 24 and a full-time student?

[eeshull]

The dependent was 19 at the end of 2022, and was not a student in 2022 or working. The capital gains were from mutual funds, and it was a net gain, no sales. I looked at the input for Child's income on the parent return- it said I needed to file a return for the dependent when I answered that an estimated payment had been made.  the instructions said that an 8615 may be required. 

If it's any help, the parent's taxable income was $54,797. 

[Bsch4477 · Accepted solution]

As I read this it would seem that your child does not meet the age requirement for Kiddie Tax. 

Attach Form 8615 to the child’s tax return if all of the following conditions are met.

1. The child's unearned income was more than $2,300.
2. The child meets one of the following age requirements:
   • The child was under age 18 at the end of the tax year,
   • The child was age 18 at the end of the tax year and didn't have earned income that was more than half of the child's support, or
   • The child was a full-time student at least age 19 and under age 24 at the end of the tax year and the child didn't have earned income that was more than half of the child's support.
3. At least one of the child's parents was alive at the end of the tax year.
4. The child is required to file a tax return for the tax year.
5. The child does not file a joint return for the tax year.

[eeshull]

Here's where I'm confused as to the rules- part 2 re: the age requirements means that if he's over 18 and not in school and is living on parental support, he's still a dependent but the kiddie tax doesn't apply? 

[Bsch4477]

That’s the way it looks to me and it would explain why the Kiddie Tax form is not appearing. 

[rjs · Accepted solution]

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@eeshull wrote:

Here's where I'm confused as to the rules- part 2 re: the age requirements means that if he's over 18 and not in school and is living on parental support, he's still a dependent but the kiddie tax doesn't apply? 

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That is correct. Since he was 19 at the end of 2022 and not a full-time student, none of the other details matter. He is not subject to kiddie tax.

Kiddie tax is not just for dependents. In fact, whether or not the person is a dependent has nothing to do with whether he is subject to kiddie tax. If you look at the complete list of conditions that Bsch4477 posted above, you will see that being a dependent is not mentioned. Being a dependent is not what made him subject to kiddie tax in previous years.

[eeshull]

Thanks so much for your help - your answers helped me see what I couldn't figure out on my own!