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Kiddie Tax - Covid, unemployment , and Form 8615
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Anyone else got young adults in the house who are frustrated by the complexities of the tax code caused by covid despite their total income being less than $15K per year?

i have 2 (dependent) kids (19 and 21) who both had jobs while in college and qualified for some unemployment when covid closed their paces of work last year. They both received more than $2200 ....so have to complete form 8615 in their tax return to determine the rate at which their unemployment benefits will be taxed. Their tax return used to take a few minutes when it was one W2 with part-time income at a little over minimum wage. Now they need loads of information from their parents return....which they can't have yet as our taxes aren't done yet, and even need information from each other's return.

Surely this bit of the tax code is there to stop rich families reducing their tax bill by putting investments in the kids name, not to give those that don't earn much a hard time completing the tax return if they receive more than 2K in unemployment during a pandemic.

As the parent i also don't want my 19 and 21 year old kids to know all the stuff about our income that the IRS is asking them to provide. They don't need to know how much i earn (well apparently they do).
i see the issues with just having a default rate or option in that it would disproportionally help the kids of wealthy families but it would save a lot of hassle.......or they could just take unemployment benefit out of the list of things that count as unearned income during covid.
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Re: Kiddie Tax - Covid, unemployment , and Form 8615 [rich_m] [ In reply to ]
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Could your problem be solved with regard to not wanting your (Dependent) kids as you describe them, by not claiming them on your taxes? Thus making it easier for your kids to stand on their own, as far as the irs and any financial aid offices see it?
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Re: Kiddie Tax - Covid, unemployment , and Form 8615 [Helltrack] [ In reply to ]
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i checked what was optional in terms of classification of dependents for other reasons a short time ago, and generally it isn't about whether the parents claim them as dependents it is whether the adult children meet the criteria to be claimed. in the case of this form they have to complete it if their earned income doesn't cover 50% or more of their costs.
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Re: Kiddie Tax - Covid, unemployment , and Form 8615 [rich_m] [ In reply to ]
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You must do their fafsa then.

My kid has known my taxes since she started having to fill out Fafsa forms. Never really thought there was much of an issue, then again. I don't have an issue sharing my income.

My oldest daughter who got unemployment has not yet done her taxes, so I guess I'll find out if she needs some info. But I wont be claiming her has a dependent so she can get the Covid relief money.

Just Triing
Triathlete since 9:56:39 AM EST Aug 20, 2006.
Be kind English is my 2nd language. My primary language is Dave it's a unique evolution of English.
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Re: Kiddie Tax - Covid, unemployment , and Form 8615 [rich_m] [ In reply to ]
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Looks like my 23 yr old, wont need to, as I think her earned income will be more than half the "support" we gave her.

I mean its a hard number to even calculate given the definition of support. From : https://www.irs.gov/instructions/i8615


Support.
Your support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. To figure your child’s support, count support provided by you, your child, and others. However, a scholarship received by your child isn’t considered support if your child is a full-time student. For details, see Pub. 501, Dependents, Standard Deduction, and Filing Information.

Oh wait her stipen is earned income, so yeah I think she will easily clear the 1/2 number, How do you even figure the food when she lived at home?? Have to look to see when the payment for her last semester of undergrad was paid, of course she is paying rent down in Fl. for 4 months. I think she is clear.

But since the new rules base their tax rate off the parents tax rate, I see why they need info from your taxes.

Just Triing
Triathlete since 9:56:39 AM EST Aug 20, 2006.
Be kind English is my 2nd language. My primary language is Dave it's a unique evolution of English.
Last edited by: DavHamm: Feb 27, 21 10:13
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