Under the American Rescue Plan, will dependent children who received unemployment in 2020 get the same $10,500 tax free benefit?

[SweetieJean]

All the bills says is this:

Special rule for 2020

In the case of any taxable year beginning in 2020, gross income shall not include so much of the unemployment compensation received by an individual as does not exceed $10,200.

But is rare for a dependent to receive unemployment comp.   How old is this person, and how much did they receive?

[taylorgrace515]

She is 21 and received $9,000 in unemployment benefits.  Currently she is being taxed on that unemployment at her parents rate due to the Kiddie Tax since her parents still claim her as a dependent.  Wondering if the American Rescue Plan will change that and make that unearned income tax exempt.

[Opus 17 · Accepted solution]

Yes, the first $10,200 worth of unemployment should be nontaxable for children who received enhanced unemployment and are currently subject to the Kiddie tax. If your child has not already filed a tax return, they should wait until all the new changes are implemented in TurboTax. If they have already filed, they should wait until the program changes are implemented and then file an amended return.