Is form 8615 required?

[peterinwa]

My grandaughter is independent of her parents, yet TurboTax want's me to complete form 8615 as if they were supporting her.

The reason is because I am checking "No, my earned income provided less than half of my support."

I believe TurboTax is assuming that her parents provided her support. But the reason I checked the above is because her income from working was $5,000 but her unearned income from unemployment was $15,000.

So her unemployment provided the majority of her support, not her parents.

Should I simply check "Yes, I provided over half my support with earned income."?

That seems to work well, but is it correct?

Thank you, Grandfather Peter

[DavidD66]

You should check "Yes".  Her unemployment benefits count as support provided by her.

[Bsch4477]

Check NO since the question concerns earned income. She did not support herself with the earned income and the amount of unearned income from unemployment makes her liable for the 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 $2,200.
2. The child meets one of the following age requirements:
   • a. The child was under age 18 at the end of the tax year,
   • b. The child was age 18 at the end of the tax year and you didn't have earned income that was more than half of the child's support, or
   • c. 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 your 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.

[peterinwa]

@Bsch4477 your opening statement sounds right to me, though it still seems odd that her taxes will be dependent on her parent's income when they don't support her.

That said, I'm not sure I'll be able to obtain her parent's income.

Also, it seems odd to me that all this is necessary because she's a student. If I tell TurboTax she's not a student, none of this applies. So because she's a student she has to pay about $1,000 more in taxes.

[AliciaP1]

Your first line of your original post states "your granddaughter is independent of her parents".  Form 8615 is for children who can be claimed as a dependent on another taxpayer's return.  If she is truly independent, her parents will not claim her as a dependent.  If you are not claiming her as a dependent as well, then she needs to mark on her tax return that she cannot be claimed as a dependent and there will be no need for the Form 8615.

To change this in TurboTax Online please follow these steps:

1. Within her return click on My Info in the black menu bar on the left
2. Click Edit on her name
3. Scroll down to #3 and make sure No is selected for Someone else can claim me as a dependent on their tax return.

@peterinwa

[Bsch4477]

Is she an emancipated minor?

[Bsch4477]

The kiddie tax rule exists in the United States of Americaand can be found in Internal Revenue Code § 1(g), which "taxes certain unearned income of a child at the parent's marginal rate, no matter whether the child can be claimed as a dependent on the parent's return".^[1]

[peterinwa]

@Bsch4477 I understand what you are saying that she doesn't have to be a dependent. And she isn't emancipated.

However, the question is whether or not her earned income provided more than half of her support. It did.

It happens that her unearned unemployment compensation was greater than her earned income, but nevertheless her earned income provided more than half of any support she received.

So now I'm thinking she should check "Yes, I provided over half my support with earned income." and form 8615 will not be required.

Thank you.

[Bsch4477]

You posted that her earned income was only $5,000.  That would hardly account for half of her support. 

[peterinwa]

@Bsch4477 good point. I had a passing thought and should have asked... what is meant by support?

I guess I was thinking of parental support as being support, since form 8615 involves a parent.

She lives at her boyfriend's mom's home, so she has almost no living expenses. The mom provides meals. Tuition and even medical insurance is provided by her scholarship.

Does all that count as support?

Assuming you say yes, then I'd agree 8615 must be completed. Which still seems so odd to me since her support doesn't come from the parent. And it's not going to be easy getting her parent's income and social security number.

Thanks again.

[Bsch4477]

https://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

Support would include the fair market value of the housing she received. Scholarship does not count toward support. 

I know that you would like the return to reflect what you want it to be. You can report anything you want but she has to be prepared for the consequences in the unlikely event she is audited. 

[peterinwa]

@Bsch4477 for sure what I want is to complete her return properly, and according to law as I have done with my returns all my life. I want to teach my grandchildren good ethics.

My friends think I'm nuts to try to understand all this; they are happy just to answer the TurboTax questions without understanding the results.

And this one was difficult to comprehend, that the income of a parent who doesn't support my granddaughter would play a role in determining her tax liability. I still face the problem of getting that information from the parent. One parent or the other.

Thank you again.

Peter