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The IRS instructions and internet instructions says for 2018 when parents report dividend income, the tax rates will be the estate tax rates. These rates are ). How do we let ProSeries professional know the rules, and follow the rules.
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Slava Ukraini!
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♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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I'm by no means an expert in these. But, following the bouncing ball in IRC § 1:
https://www.law.cornell.edu/uscode/text/26/1
Kiddie tax is in subsection (g). (g)(1) discusses the computation using the "allocable parental rate" (under the old rules). (g)(7) discusses the election to report on parents return.
https://www.law.cornell.edu/uscode/text/26/1#g
https://www.law.cornell.edu/uscode/text/26/1#g_7
The 2018-2025 modifications are in the new subsection (j) with kiddie tax specifically in (j)(4).
https://www.law.cornell.edu/uscode/text/26/1#j
https://www.law.cornell.edu/uscode/text/26/1#j_4
"1(j)(4)(A) In general. In the case of a child to whom subsection (g) applies for the taxable year, the rules of subparagraphs (B) and (C) shall apply in lieu of the rule under subsection (g)(1)."
So the new rules supplant (g)(1) but do not appear to modify or make obsolete (g)(7).
Rick
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(g)(7) still applies, but (g)(7)(B)(ii) still says the tax is the "amount determined under this section", which would include the Trust rate.
Right? Or do I need to read it when I have a mind-set to read legalese?
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Peter: There are a lot of bugs in the system this year. Most that I remember in a long time. I will flag this to try and get it worked on.
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Slava Ukraini!