Thank you all for your responses but may I zero on on specific questions for clarity?
1. My grandson will not be claimed as a dependent by his parents and his $25,000 in earned income will be greater than 1/2 of his living expenses even though he will not pay more than 1/2 of his living expenses. I read elsewhere it doesn't matter if he is "claimed" by his parents, only if he "could be" claimed by his parents which is the important criteria. Could he be claimed if he was a 22 year old student with $25,000 in earned income?
2. According to the rules stated for having to complete IRS form 8615 one of the conditions is:
"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."
Since his $25,000 in earned income is greater than 1/2 his living expenses, and therefor he does not need to complete Form 8615, does that mean the kiddie tax does NOT apply? (also, not sure that it matters but he was no longer a student at "the end of the tax year" as stated above, since he graduated in May).
I read elsewhere if he had earned income that was more than 1/2 his living expenses (hence he does not meet the condition for having to complete Form 8615 as stated above) the kiddie tax would not apply, even if his parents "actually paid" more than 1/2 of those living expenses (i.e. my grandson paid less than 1/2 out of his earned income). I'm not trying to play on words, just trying to determine exactly what the rules say. That is exactly how this other statement read (he need only "provide" i.e. have earned greater than 1/2, even if his parents actually "paid" more than 1/2). If he earned it (i.e. $25,000) that's all the matters, not that he had to spend it on more than 1/2 his expenses.
Thank you for your help understanding the rules...
