It would appear that Turbotax tax is calculating my daughter's tax rate wrongly on her federal tax return.
Because she earned over $15,750, her income cannot be included on my tax return. Under current tax laws, you have to include your taxable income on the child's tax return so they can be taxed at the parent's marginal tax rate instead of their own. From my understanding, the reason for this is that parents were claiming assets on their child's tax return instead of their own as a way to lower their own tax bill.
The way this should be calculated is as follows, all of the child's income over $2700 has to be taxed at the parent's marginal tax rate. For example our tax rate is 24% which means the calculation should be as follows.
(<unearned income> - 2700) * 0.24
In our case the software is calculating her federal taxes due at rate of 33%, instead of at our 24% marginal rate.
The state tax return (CA) is calculating her taxes due at the correct rate (9.3%).
It seems like there is a bug in the software for calculating the "kiddie tax" on unearned income for the federal taxes. Is there any way I can submit a support ticket for this to be investigated and fixed?
