My son received a refund of all taxes paid for 2020. He is a full time student and received unemployment but we thought the kiddie tax applied. Not for 2020?

[DeskJockey88]

It seems the IRS is waiving the kiddie tax in the American rescue plan?

[Critter-3]

The "kiddie tax" doesn't apply to unemployment income. 

[DeskJockey88]

Everything I read says that unemployment income is unearned income and this means the kiddie tax would apply.  So apologies but do you mean the kiddie tax just doesn't apply in 2020 to unemployment income or it never applies?  Because TurboTax software asked us the questions and hit us with the tax.  Thanks

[rjs · Accepted solution]

Kiddie tax does apply to unemployment income. But the child's unearned income is calculated after the $10,200 unemployment exclusion is applied. And the kiddie tax only applies to unearned income in excess of $2,200. So if your son's unemployment was $12,400 or less, and he had no other unearned income, there would be no kiddie tax.

The $10,200 unemployment exclusion is only for 2020.