Long Term Capital Gains at Zero Tax

[s6skuzy01]

Entering my daughters taxes and she only has investment income.  She sold some of her investments to pay for college.  It was not a 529 but in a standard investment account.  These shares were purchased in 2006 and sold in 2019.  The gain was 11,000 and was listed on the 1099B as long term capital gains.  When entering into TurboTax, its not taxed at 0% but at 10%.  Based on the tax bracket, up to 0-39000 is at the zero percent rate.  Can someone explain what I am doing wrong or is this correct and I'm missing something?  She had no earned income.

Thanks

[DianeC958 · Accepted solution]

The tax being assessed is correct.

The tax that is showing is from form 8615 Tax For Certain Children Who Have Unearned Income.  Because your daughter does not have earned income and is a full time student she is being assessed on the amount of investment income that is above $2200.

This tax is often referred to as the Kiddie Tax.

Attach Form 8615 to your tax return if all of the following conditions are met.

1. Your unearned income was more than $2,200.
2. You meet one of the following age requirements:
   • a. You were under age 18 at the end of the tax year,
   • b. You were age 18 at the end of the tax year and you didn't have earned income that was more than half of your support, or
   • c. You were a full-time student at least age 19 and under age 24 at the end of the tax year and you didn't have earned income that was more than half of your support.
3. At least one of your parents was alive at the end of the tax year.
4. You're required to file a tax return for the tax year.