Form 8615

[anewhouses]

My child is claimed by her father (divorced), she is 20 years old and a full-time student living on her own.  She is being asked to fill out form 8615 because she received unemployment last year.  The form wants the custodial parent's AGI.  I have always been the custodial parent and used her for head of household status, etc.  My question is does she have to fill out that form?  Should she use her father's AGI because he claims her or not because this year she was on her own.  Or do we use my AGI?  

Thank you.

[Hal_Al]

The answer to your question is: you use your AGI.  But, you're working on the wrong issue.

You stated" "My child is claimed by her father (divorced).....and  I have always been the custodial parent and used her for head of household status, etc"

You can't do that anymore, now that the child "is 20 years old and ..... living on her own".  She is no longer in anyone's custody if she is living on her own.  Even if "living on her own" is nothing more than being away at school (only a temporary absence from the parent's home), at age 20, she is emancipated*.  An emancipated person is not in anyone's "custody". The parents can no longer split the tax benefits.  Only one of you can claim her and probably neither. 

You may be able to claim her (if she is temporarily away from your home and technically still living with you, but not in your "custody" ) under the qualifying child rules or the father may be able to claim her under the qualifying relative rules, but not both.  If her unemployment and other income totaled more than $4300, the father cannot claim her.

See full dependent rules at: https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Ret...

*except in Mississippi

[RayW7]

For 2020, a child must file Form 8615 if all of the following conditions apply:

• The child has more than $2,200 in unearned income
• The child is required to file a tax return
• The child does not file a joint tax return with a spouse
• At least one of the child's parents is alive
• The child is within certain age limits

For tax purposes, the child's "age" is the age on December 31. The child must file the form if any of these conditions apply:

• The child is under 18 at the end of the year
• The child is 18 years old and does not have earned income that is more than half of the child's support for the year, or
• The child was a full-time student age 19-23 and does not have earned income that is more than half of the child's support

Treatment of unearned income

In general, in 2020 the first $1,100 worth of a child's unearned income is tax-free. The next $1,100 is taxed at the child's income tax rate for 2020. Anything above $2,200, however, is taxed at the rate that applies to trusts and estates, which usually is higher than the child's rate. This tax treatment has gained a nickname: the "kiddie tax." Calculating how much tax applies to the child's income is the purpose of Form 8615.

Information on the form

When filing the form, you must provide the child's name and Social Security Number (SSN) and the name and Social Security Number of a parent, as well as which filing status the parent is using, such as single, joint or married filing separately. The form has three parts:

• Part I identifies the child's net unearned income and how much of it is subject to the kiddie tax
• Part II calculates the kiddie tax based on the parent's tax rate
• Part III calculates the child's tax that is used on the child's Form 1040

If you are claiming her as HOH status then you would use your AGI.

[anewhouses]

Can her father claim her because she is a full-time student?  When I said living on her own, I meant that she's not even coming home for breaks, she has an apartment in the college town.  Is she still considered a dependent then?  She is not "emancipated".  Does having more unemployment than $4300/yr exclude her from being claimed even if she is a full-time student?  She is filing her own separate tax return for that.

Thanks so much!

[npierson7]

Her father can claim her if he provides more than 50% of her support and she's a full time student, even if her income is greater that $4,300 - this limitation doesn't apply to qualified children. 

As for your pervious question, she needs to use AGI of her parent who claims her as a depended, her father in that case. 

[Hal_Al]

Q.  Does having more unemployment than $4300/yr exclude her from being claimed even if she is a full-time student? 

A. Yes and no.  It excludes the father from claiming her.  It does not exclude you from claiming her. There are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative" [QR] in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test.  You meet the QC rules because the child lives with you. The father does not. The father does not meet the QR rules because of the $4300 income test (and probably a couple of other tests).

Q. Can her father claim her because she is a full-time student? 

A. No.  The full time student rule only applies if the student lives with the parent. You can still claim her under the Qualifying Child rules, but the father can't. An "apartment in the college town", generally means a temporary absence from the parent's home. If she was living with you, before she went to school, she is still considered as living with you. Although, "she's not even coming home for breaks" does make that iffy.  She cannot be considered as living with her father. 

Unless you live in MS, she is considered emancipated, by age alone,  for purposes of the special tax rules for divorced or separated parents. 

[anewhouses]

Thank you so much.  This was very  helpful.